Sage 50 Accounts - Irish VAT - Temporary lowering of the Standard Rate of VAT for Ireland - July Jobs Stimulus Package

What's changing?

On 23 July 2020, An Taoiseach, Micheál Martin announced the July Job Stimulus Package. This is a programme of initiatives and incentives designed to help businesses re-open, get people back to work and promote confidence. As part of this programme the standard VAT rate was lowered from 23% to 21% for 6 months effective 1 September 2020 through to 28 February 2021 Full details can be found here - GOV.IE Guidance

For information about how to revert back to a standard rate of 23% from 1 March 2021, please refer to the following article >

NOTE: In addition, in the Irish Budget 2021, it was announced that from 1 November 2020 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%. Read more >
The Covid Restrictions Support Scheme (CRSS) is also available to support businesses that can no longer operate, or can only trade at significantly reduced levels, due to Covid restrictions. Read more >

In Sage 50 Accounts you can edit and add tax codes in the software.  You can create a new tax code to represent the temporary 21% VAT rate, which may mean it is simpler to identify transactions you're entering during this temporary reduced VAT rate period for reconciliation and analysis purposes.

Create your new tax codes

You can use a new tax code for transactions that qualify for the lowered standard VAT rate. You will also need to create two further new tax codes to represent the existing tax codes T8 and T24 which are linked to tax code T1. You may also want to create a further two tax codes to represent T11 and T18. It's really easy to set up a new codes.

We recommend using T39, T40, T41, T42 and T43. If these are already in use, use the next available codes.

1. On the menu bar, click Settings, click Configuration then click Tax codes.
2. Select the tax code T39 or the next available code, and click Edit.
3. Complete the edit tax code window as follows:
   

   Rate	Enter the required percentage as 21.00
   Include in VAT Return	To ensure the transactions are picked up by the VAT Return, select this check box
   Reverse Charge	From the drop-down list, choose No
   Resale	Select this check box
   Outside EC	Leave this check box unticked
   Enable EC Code	Leave this check box unticked
   Rate	From the drop-down list, choose Standard
   Description	Enter this description: Temp std. rated sales and purchases of goods for resale

4. Click OK.
5. Select tax code T40, or the next available code, and click Edit.
6. Complete the Edit tax code window as follows:
   

   Rate	Leave the percentage rate as 0.00
   Include in VAT Return	To ensure the transactions are picked up by the VAT Return, select this check box
   Reverse Charge	From the drop-down list, choose No
   Resale	Select this check box
   Outside EC	Leave this check box unticked
   Enable EC Code	Select this check box and then select the following options: EC Purchases, Goods.
   Link to	Choose T39 or any alternative code you have used
   Rate	From the drop-down list, choose Standard
   Description	Enter this description : Temp std. rated purchases of goods from suppliers in EC

7. Click OK.
8. Select tax code T41 or the next available code and click Edit.
9. Complete the edit tax code window as follows:
   

   Rate	Leave the percentage rate as 0.00
   Include in VAT Return	To ensure the transactions are picked up by the VAT Return, select this check box
   Reverse Charge	From the drop-down list, choose No
   Resale	Leave this check box unticked
   Outside EC	Leave this check box unticked
   Enable EC Code	Select this check box and then select the following options: EC Purchases, Services
   Link to	Choose T39 or any alternative code you have used
   Rate	From the drop-down list, choose Standard
   Description	Enter this description : Temp std. rated purchases of services from suppliers in EC

10. Click OK.
11. Select tax code T42 or the next available code and click Edit.
12. Complete the edit tax code window as follows:
    

    Rate	Enter the required percentage as 21.00
    Include in VAT Return	To ensure the transactions are picked up by the VAT Return, select this check box
    Reverse Charge	From the drop-down list, choose No
    Resale	Leave the check box unticked
    Outside EC	Leave the check box unticked
    Enable EC Code	Leave the check box unticked
    Rate	From the drop-down list, choose Standard
    Description	Enter this description : Temp std. rated purchase of goods for non-resale

13. Click OK.
14. Select tax code T43 or the next available code and click Edit.
15. Complete the edit tax code window as follows:
    

    Rate	Leave the percentage rate as 0.00
    Include in VAT Return	To ensure the transactions are picked up by the VAT Return, select this check box
    Reverse Charge	From the drop-down list, choose No
    Resale	Leave the check box unticked
    Outside EC	Leave the check box unticked
    Enable EC Code	Select this check box and then select the following options: EC Purchases, Goods.
    Link to	Choose T42 or any alternative code you have used
    Rate	From the drop-down list, choose Standard
    Description	Enter this description : Temp std. rated purchases of goods from suppliers in EC

16. Click OK, then click Apply.
17. Click Close, then, if prompted, to save the changes, click No.

Your new tax codes are now ready to use from 1 September 2020.

NOTE: The following steps still apply if you elect to edit T1, instead of creating new tax codes.

Recurring entries - Invoices and Credits

If you use the recurring entry function in your software, any recurring items that include tax rates that need to be updated should be edited and amended from 1 September.

1. Ensure you have processed your entries up to 31 August.
2. Click Invoices and Credits, Sales Orders or Purchase orders as required.
3. Click New or New Invoice then click Recall.
4. Note the reference of the item you with to change, select it and click Load.
5. Double-click the description of the item you want to amend.
6. Change the tax code to T39 or equivalent, and click OK, then repeat for any other items affected.
7. Click Memorise and enter the reference you noted in step 4.
8. Click Save and click Close.

Recurring entries - Bank transactions

If you use the recurring entry function for bank transactions, you may need to update your recurring payments, receipts or if you use VAT Cash Accounting, Sales payments on account.

1. Ensure you have processed your entries up to 31 August.
2. Click Bank, then click Recurring, select the required item and click Edit.
3. In Posting Amounts, change the Tax code to T39 or equivalent and click OK.
4. Repeat for any other recurring items.

Memorised batch invoices or credits

If you have memorised batch invoices or credits for regular use, you can update these templates if you need to apply the new tax code.

1. Click Customers or Suppliers as required, then click Batch invoice or Batch Credit.
2. Click Recall and make a note of the template name you choose to edit.
3. Amend the tax code to T39 or equivalent and click Memorise.
4. Save the file using the same file name you noted in step 2.

Memorised bank payments or receipts

1. Click Bank, then click Bank payment or Bank receipt as required.
2. Click Recall and make a note of the template you choose to edit.
3. Amend the tax code to T39 or equivalent and click Memorise.
4. Save the file using the same file name you noted in step 2.

Outstanding Orders and Invoices

If you have any outstanding invoices or orders to update on or after 1 September, you may need to edit the tax codes used on these items.

1. Open the required module, for example Invoices and credits or Sales orders.
2. Double-click the required item.
3. Double-click the description of the item.
4. Amend the tax code to T39 or equivalent.
5. Click OK, and then click Save.

Customer, Supplier and Product Records

Tax codes are stored in the customer, supplier and product records, if you need to change the tax codes for some or all of your records there are several approaches you can take.

• If only a small number of records are affected, you can manually edit the records, change the tax code and save them again.
• If a larger number of records are affected you can use the Batch changes option - This feature is available in Sage 50 Accounts Standard and Professional.
• If you use Sage 50 Accounts Essentials, and you need to amend a large number of records, you can export the records, amend the tax codes and import the records again.

Other considerations

• If you use screen capture software to import transactions into Sage 50 Accounts, you may need to update the rules in that software to include your new lowered VAT rate.
• If  you're likely to create a number of new customer, supplier or product records before February that require a reduced rate VAT code, you may want to change the default tax codes that are applied to these  records as they are created. you can do this in Settings by editing the relevant defaults option.
• If you have designed any customised VAT reports, you may need to edit the filters to make sure your new tax code is included. Read more >

Further information

• If you're unsure if a transaction is vatable, or if you require further advice about VAT compliance, and how to approach this change in your business, we recommend that you contact Gov.ie or your accountant.
• FAQs
• Gov.IE
• Watch the webinar

Still need help?