VAT in Sage Accounting Start

Summary

How to handle VAT in Accounting Start.

Resolution

Supported VAT schemes

Verify your VAT scheme upon sign-up; ensure accuracy before transactions to avoid VAT errors.

We support the following VAT schemes:

Invoice basis

On this scheme:

you reclaim VAT when you record an invoice from your supplier
you pay VAT when you invoice your customers

Cash basis

On this scheme:

you pay VAT when your customer pays you
you can't reclaim VAT on your purchases until you've paid for them

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 accounts

This 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.

Standard VAT

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

Cash Accounting

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 rates

You 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

Revenue will need regular VAT Return submissions. This could be once a month, quarterly or once a year.

We automatically work out VAT when you enter your transactions. The calculations take account of:

Your VAT scheme
The VAT rate you select
The location and VAT number of the customer or supplier the transaction is for

Read about how each value on the VAT Return calculates.

Depending on when your VAT Return is due, you'll need to:

Create the VAT Return from Sage Accounting
Submit it to Revenue

Read about how to create and submit a return to Revenue.

Solution Properties

Solution ID: 222001000100538
Last Modified Date: Thu May 23 10:28:04 UTC 2024
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