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Brexit - Trading with the United Kingdom after 1 January 2021 when not using Sage 50cloud Accounts - ROI only

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Summary

After 1 January 2021, if you are based in the Republic of Ireland, some new rules apply when trading with companies in the UK.

Description

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Trading goods with the UK

Buy goods from the UK - Postponed Accounting

The UK's withdrawal from the EU means that most imports and exports from and to the UK must now be treated the same as Rest of World for VAT purposes. Revenue have also introduced a new postponed accounting scheme to reduce the cash flow impact of these changes. This affects how you record the import of goods within Sage 50 Accounts.

After 1 January 2021, a new Box, PA1, will be added to the VAT Return, and three new boxes, PA2, PA3 & PA4, will be added to the RTD. Since these will not exist in older versions of the software, you must create and use some new tax codes and run reports to identify the values for these boxes, and add them manually to your VAT Return and RTD.

TIP: If you have Sage 50cloud Accounts, the v27.1 update creates these tax codes for you. 

Create new tax codes

The following table shows all codes which will need to be manually created:

NOTE: If you've already used any of these tax codes for other purposes, you can create them using the next available code. 

Code Description Exact replica of
T39  Standard rate ROW import (Resale) Postponed VAT

T40

 Standard rate ROW import (Non resale) Postponed VAT

T41

Zero rated ROW import (Resale) Postponed VAT

T42

Zero rated ROW import (Non resale) Postponed VAT

T43

Reduced rate ROW import (Resale) Postponed VAT

T44

Reduced rate ROW import (Non resale) Postponed VAT

T45

Second reduced rate ROW import (Resale) Postponed VAT

T46

Second reduced rate ROW import (Non resale) Postponed VAT

T47

Livestock rate ROW import (Resale) Postponed VAT

T48

Livestock rate ROW import (Non resale) Postponed VAT

T49

Flat rate compensation rate ROW import (Resale) Postponed VAT

T50

Flat rate compensation ROW import (Non resale) Postponed VAT

How to post
Net only invoice - Goods only
  • To record this, post a purchase invoice as follows:
    Type Net T/C VAT
    Purchase invoice Goods net amount T39 - T50 Zero
  • Once posted you must then contra the VAT transactions against a bank account:

     NOTE: If you regularly post this type of transaction, you may prefer to create a dedicated contra bank account to post the payment and receipt transactions to.

    Type Net T/C VAT
    Purchase payment (contra bank),
    allocated to purchase invoices
    Zero T1 - Standard rate Import VAT amount
    Sales receipt (contra bank),
    allocated to sales invoice
    Zero T1 - Standard rate Import VAT amount
  • The VAT Return and RTD are affected depending on the tax code selected. Please see the tax code table above.
VAT only invoice - Import VAT only
  • You must also create a customer account to contra the purchase invoice against.
  • To record this, post a purchase invoice and a sales invoice as follows:
    Type Net T/C VAT
    Purchase invoice Zero T39 - T50 Import VAT Amount
    Sales invoice (Contra) Zero T39 - T50 Import VAT Amount
  • The VAT Return and RTD are affected depending on the tax code selected. Please see the tax code table above.
Net + VAT - Goods and import VAT
  • You must also create a customer account to contra the purchase invoice against.
  • Then, to record this, post separate purchase invoices for the NET and VAT amounts to the supplier, and a sales invoice to the customer contra account created, as follows:
    Type Net T/C VAT
    Purchase invoice Zero T39 - T50 Import VAT amount
    Sales invoice (contra) Zero T39 - T50 Import VAT amount
    Purchase invoice Goods net amount T39 - T50 Zero
  • Once posted you must then contra the VAT transactions against a bank account:

     NOTE: If you regularly post this type of transaction, you may prefer to create a dedicated contra bank account to post the payment and receipt transactions to.

    Type Net T/C VAT
    Purchase payment (contra bank),
    allocated to purchase invoices
    Zero T1 - Standard rate Import VAT amount
    Sales receipt (contra bank),
    allocated to sales invoice
    Zero T1 - Standard rate Import VAT amount
  • The VAT Return and RTD are affected depending on the tax code selected. Please see the tax code table above.
  • If you receive a separate invoice for import duty plus VAT, record this in the same way.
Calculate the manual figures and add them to the VAT Return and RTD
Download and restore the the Day Books Supplier Invoice and Credits reports

To make it easier for you we have created a report to help you calculate the figures you need to add to the VAT Return and RTD.

  1. Click Download on the link below:
    Report name View the report Download
  2. Enter your Sage website login details, then click Sign In.
  3. Follow the on-screen instructions.
Calculate the manual figures for your VAT Return and RTD
  1. Click Suppliers then click Clear to make sure no records are selected.
  2. Click Reports then click My supplier reports and select the Postponed accounting transaction totals by tax code report.
  3. Click Preview and select the following criteria:
    Supplier Ref Leave this as it is.
    Transaction Date Enter the dates of the VAT period you are reporting for.
    Tax code (To to T99) Enter the Tax code you want to report for. For example T39.
  4. Click OK.
  5. From the report take the Invoice NET balance - Credit NET balance value and manually add it to the following boxes for the relevant tax code on you RTD before submitting:
    Tax code Description Boxes
    T39 Standard rate ROW import (Resale) Postponed VAT P2 / Z2 / PA2
    R1 / Z3 / PA3
    T40 Standard rate ROW import (Non resale) Postponed VAT P2 / Z2 / PA2
    R2 / Z5 / PA4
    T41 Zero rate ROW import (Resale) Postponed VAT D2 / Z2 / PA2
    J1 / Z3 / PA3
    T42 Zero rate ROW import (Non resale) Postponed VAT D2 / Z2 / PA2
    J2 / Z5 / PA4
    T43 Reduced rate ROW import (Resale) Postponed VAT AC6 / Z2 / PA2
    AH5 / Z3 / PA3
    T44 Reduced rate ROW import (Non resale) Postponed VAT AC6 / Z2 / PA2
    AH6 / Z5 / PA4
    T45 Second reduced rate ROW import (Resale) Postponed VAT AC6 / Z2 / PA2
    AH5 / Z3 / PA3
    T46 Second reduced rate ROW import (Non resale) Postponed VAT AC6 / Z2 / PA2
    AH6 / Z5 / PA4
    T47 Livestock rate ROW import (Resale) Postponed VAT C6 / Z2 / PA2
    H5 / Z3 / PA3
    T48 Livestock rate ROW import (Non resale) Postponed VAT C6 / Z2 / PA2
    H6 / Z5 / PA4
    T49 Flat rate compensation ROW import (Resale) Postponed VAT B6 / Z2 / PA2
    G5 / Z3 / PA3
    T50 Flat rate compensation ROW import (Non resale) Postponed VAT B6 / Z2 / PA2
    G6 / Z5 /  PA4
  6. From the report take the Invoice VAT balance - Credit VAT balance value and manually add it to the following box on you VAT Return before submitting:
    • PA1
Sell goods to the UK

For businesses selling goods to the UK, excluding those using the Northern Ireland protocol, you should now treat this as a sale to a non-EC country. 

For this you would normally use the zero rated export of goods to customers outside EC tax code, T14.

Trading goods with Northern Ireland - Northern Ireland protocol

When trading goods with Northern Ireland, to avoid a hard border, the Northern Ireland protocol has been introduced.

Buy goods from Northern Ireland

Under the Northern Ireland protocol, buying goods located in Northern Ireland should continue to be treated like intra-community acquisitions after 1 January 2021.

Sell goods to Northern Ireland

Under the Northern Ireland protocol, selling goods to Northern Ireland should continue to be treated like intra-community dispatches  and distance sales after 1 January 2021.

Buy and sell services

There is no change in the way you buy and sell services to and from the UK. 

Please continue to process services as you always have. 


This article provides general rather than specific guidance to assist all of our customers, including both in the United Kingdom and Republic of Ireland. 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 for our general customer base 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. For VAT, customs and excise and duties enquiries you should contact The Revenue. In no event will we be liable to you for any direct, indirect, consequential or incidental loss or damage arising out of or in connection with your use of the information provided.
The VAT or tax codes used in this article are based on the default or recommended codes set up in the software. These may be different in your software.