SageForum for UK versions of Sage 50- Help and support.

Hello,

I am a VAT registered startup company and end of march is my first VAT payment

am about to re-enter my sales and purchases for the 2nd time after making lots of mistakes and things got messy! I have not had many sales / purchases so this wont take me that long (I hope) but need some very quick and simple advice for my VAT entries.

I have made some puchases, some I have paid VAT on and some I dont pay VAT because I supplied them with my VAT number.

I use Sage Line 50 (v12).

I create a Purchase Order and I enter all the details etc for the purchase.

For all products from "Supplier A" I dont pay VAT so do I enter T0 as the tax code? Is this the correct code or do I assign another tax code. This supplier is also based in Europe? Does this make a difference?

For "Supplier B" who is UK based they charge me VAT so I use T1 at 17.5% for all purchases.

All my sales invoices include VAT at 17.5%.

I assume that when I use the VAT wizard the VAT is only calculated on sales and purchases that are under tax code T1.

Can you confirm if this is the correct way of going about this.

Thank you in advanced.

You need to use the appropriate tax code for each transaction.

T0 is zero rated IE VAT charged at 0%... See link below for more info

http://sage.support.makingithappen.co.u ... t_code.htm

Vat is calculated on all tax codes, the only exception is T9, however, several vat codes eg T0 and T2 have 0% VAT charged and have a null result

Ok, so I should really be using code T7 and not T0 for purchases from Europe where I have supplied them my VAT number and they dont charge me VAT on my purchases?

If I puchase goods from the UK and I am not charged VAT by my supplier would I use T2?

After I have posted my purchases into the Nominal Register can I make the VAT Tax code change from T0 to T7 via the corrections in the Maintenance window?

Thank you for your advice. It is much appreciated.

Regards

Paul

Yes and No

If you purchase something from a supplier in the UK then the tax code could be either T0 or T2.

I don't think the VAT man will string you up if you get it wrong, but there is a subtle difference.

T2 is exempt e.g. an unregistered trader or stamps.

T0 is Zero rated e.g. Food or Books

T0 can usually be spotted, because the invoice will have a VAT number on it and it will show £0.00 VAT at 0.0%

As I say, I don't think this is a hanging offence so don't get too worried about it.