| | VAT in Sage Accounting Start |
| Resolution | Supported VAT schemesVerify your VAT scheme upon sign-up; ensure accuracy before transactions to avoid VAT errors. We support the following VAT schemes: On this scheme: Also known as the receipts or money received basis. You can use this scheme if either: - your annual turnover it's not more than €2,000,000 or,
- Over 90% of your supplies are for non-VAT registered or limited VAT deduction customers
Find out more on the Revenue website (Opens in a new window). If your company isn't VAT registered, select Not Registered. Read about how to get set-up for VAT.
How we record VAT in your ledger accountsThis clarifies VAT recording in your ledger for understanding in financial reports and Revenue payment Standard VAT records VAT upon invoice creation, while Cash Accounting records VAT upon payment receipt, altering ledger transactions. You settle VAT when creating the invoice, regardless of payment status - Entering a sales invoice or receipt records VAT in the 2200 VAT on Sales account.
Enter VAT in the 2201 VAT on Purchases account when recording a purchase invoice or payment - VAT amounts go to 2202 VAT Liability upon submission. VAT on Sales/Purchases balances are now zero
- Adjustments or corrections after VAT Return submission go into the 2203 VAT Allocations & Adjustments account
- VAT Return payment updates the VAT liability ledger account with the payment amount. When you have fully paid your VAT, the balance of the VAT liability ledger account is zero
After paying VAT, clear the remaining amounts in VAT ledger accounts by entering necessary journals
- Pay/reclaim VAT when customer pays your invoice or when you pay supplier's for purchase's
- Entering other receipt records VAT in 2200 VAT on Sales ledger account
- Sales invoices record VAT in 2204 - VAT on Sales Holding Account to track owed VAT upon customer payment
Received payment of sales invoice transfers VAT to 2200 VAT on Sales ledger, reported on next VAT Return - When you enter another payment, we record the VAT in the 2201 VAT on Purchases ledger account
- Purchase invoices record VAT in 2205 - VAT on Purchases Holding Account to track reclaimable VAT upon supplier payment
- Supplier payment transfers VAT to 2201 VAT on Purchases ledger, reported on the next VAT Return
VAT on Sales and Purchases moves to 2202 VAT Liability upon return submission, clearing ledger accounts to zero - Adjustments or corrections post-VAT Return add amounts to 2203 VAT Allocations & Adjustments ledger account
Paying VAT updates liability account. Fully paid VAT equals zero balance in the liability ledger account To clear the remaining amounts in VAT ledger accounts post-payment, enter journals accordingly
VAT rates to use Depending on what you buy or sell, there are several different VAT rates, which apply. To keep things simple, we set-up and update the VAT rates for you. Simply choose the appropriate VAT rate for your transaction. The VAT rates you can choose are: - Standard – 23%
- Reduced Rate – 13.5%
- Second Reduced Rate – 9%
- Zero Rated – 0%
- Exempt – transactions are exempt from VAT. The net amount still appears on your VAT Return
- No VAT – for transactions not involving VAT. These don't appear on your VAT Return
Other VAT ratesYou can't create your own VAT rates (such as the T code in Sage 50). Some businesses use a sub-scheme to calculate VAT differently to the Standard 23%. So to record transactions with a different VAT rate: Enter the transaction and select the Standard rate Change the VAT value to the correct amount. This ensures that the transaction shows on your next VAT Return, and the amount of VAT is correct
Read about VAT rates
The VAT Return |
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