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Sage 200 - Temporary reduced VAT rate for hospitality and tourism in the Republic of Ireland

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Summary

In the Irish Budget 2021, it was announced that the VAT rate applicable to certain goods and services, primarily in the hospitality and tourism sector, would temporarily be reduced from 13.5% to 9%. This change comes into effect from Sunday 1 November 2020 and is effective until December 31 2021.

Process

What's changing?

To help businesses mainly in the hospitality, holiday accommodation and attractions sectors, the reduced rate of VAT (9%) will apply to:

  • The supply of restaurant and catering services, guest and holiday accommodation.
  • Various entertainment services such as admission to cinemas, theatres, museums, fairgrounds and amusement parks.
  • Hairdressing and certain printed matter such as brochures, maps and programmes.

Details of the reduction can be found in the Revenue Budget Summary and on the Budget website >

 NOTE: This article provides general rather than specific guidance to assist all of our customers. We always do our best to make sure that the information is correct but as it's general guidance, no guarantees can be made concerning its suitability for your particular needs. The information is valid at the time of publishing and is provided without any warranty of any kind, express or implied. You should take professional advice if you require specific guidance on your individual circumstances, for example to ensure that the results obtained from using our software comply with statutory or regulatory requirements.

During this period you will need to ensure that you raise & record invoices correctly, depending on the classification of the goods/services.

Unless already enabled the software will need a lower rate VAT code of 9%.

 TIP: If you already have a reduced rate of VAT and wish to report on items temporarily impacted by the VAT change you can create a separate VAT code to help you keep track. 

Important Information:
Additional Companies

Should you set up additional data sets within your product you will need to ensure that the database is set up to include the reduced rate of VAT. 

How to check if you have a reduced rate of VAT enabled

You will need to do the following:

Sage 200 Standard/Education:

  • Open Settings > Organisational and Financial > VAT Rates.
  • Review the list of rates for one set to 9% for the lower rate. 

Sage 200 Professional:

  • Open Accounting System Manager > Settings > VAT Rates.
  • Review the list of rates for one set to 9% for the lower rate. 

If you don't already have a lower rate, see below.

How to set up a VAT rate for the reduced rate

Sage 200 Standard/Education:

  • Open Settings > Organisational and Financial > VAT Rates.
  • Click Add and enter in detail including.
Code An available VAT Code number
Name This can be anything which is meaningful to your business
VAT return This must be ticked
% Set to 9%
Input Code Optional depending on your business setup
Output Code Optional depending on your business setup
  • Click OK.

Sage 200 Professional:

  • Open Accounting System Manager > Settings > VAT Rates.
  • Click Add and enter in detail including.
Code An available VAT Code number
Name This can be anything which is meaningful to your business
VAT return This must be ticked
% Set to 9%
Input Code Optional depending on your business setup
Output Code Optional depending on your business setup
  • Click OK.
Further Considerations
VAT Return reconciliation

As part of this process if you identify an invoice where information has been recorded incorrectly, it is advisable to carry out a full error correction rather than amend values on the VAT return. For assistance with error corrections in the software please see the help file here.

Accounting for supplies that straddle the temporary reduced rate

In most cases, you will simply account for VAT at 9% for supplies made from 1st November 2020

Default Customer/ Supplier rates 

You may need to review any Customer or Supplier default VAT codes, where you solely engage with them for items connected with the reduced VAT rate.

How to change the default VAT code
  • For Customer records navigate to Customers (Sales ledger for Professional)
  • Create & Amend Accounts (Sales Accounts for Professional) > Amend Customer Details > select an account > Trading tab.
  • The Default VAT code can then be altered using the dropdown box.
  • Click Save after making the change.

  • For Suppliers records navigate to Suppliers (Purchase ledger for Professional)
  • Create & Amend Accounts (Purchase Accounts for Professional) > Amend Supplier Details > select an account > Trading tab.
  • The Default VAT code can then be altered using the dropdown box.
  • Click Save after making the change.

Alternatively, you can prepare an import to change several records at once , further information on how to prepare this import can be found here:

Sage 200 Standard/Education:

Customer Account Import
Supplier Account Import

Sage 200 Professional:

Customer Account Import
Supplier Account Import

 TIP: If you retain the import file you can use it to reverse when needed by simply changing the VAT Code.

 CAUTION: Keep a list of any changes you make in the product as they will need to be changed at the end of the period the lower rate applies for.