Fuel scale charges are taxes against fuel provided for personal use in company cars. These charges are dependent upon the carbon dioxide, CO2 emissions band of the car. Paying a fuel scale charge allows you to recover the VAT on the fuel purchased by your business.
When you enter your fuel scale charge details, a set of journal entries are created and posted to the audit trail.
Tip: If you’re using a UK Flat rate VAT scheme, scales charges aren’t applicable.
To enter scale charges
1. VAT > Scales Charges.
2. Complete the Enter Details window as follows:
Scale charges account
Choose the required nominal code for your scale charges. By default, this is 7350.
Posting date
Enter the date for the scale charges.
Reference
Enter a reference for your scale charges transactions.
Details
Enter any required details.
Gross scale charge
Enter the gross value of the scale charge.
Tax code
Choose the required tax code for the scale charge.
VAT scale charge
This value calculates automatically from the gross scale charge value and the tax code. You can’t change this.
Net scale charge
This value calculates automatically from the gross scale charge value and the tax code. You can’t change this.
To ensure you record your VAT correctly, before you process your transactions in Sage 50 Accounts you should check the details in the VAT Settings are correct.
If your company is VAT registered, you should receive a VAT registration number from your tax authority. This must appear on your financial documents such as invoices and credit notes.
To check your VAT registration number is in the correct format, please refer to HMRC
Non-Vatable Tax Code
By default, T9 is the non-vatable tax code. To change this, from the drop-down list choose the required tax code.
You should use this tax code on transactions, that don’t include VAT and are not included on the VAT Return.
Item VAT Amendable
To change the VAT amount that calculates automatically when you create invoices or credit notes, select this check box.
VAT Scheme
From the drop-down list choose from one of the following VAT schemes:
Standard VAT – Where you account for VAT at the point of sale, regardless of whether or not payment has been made.
VAT Cash Accounting (UK) – Where you account for VAT when money is paid or received for goods or services.
Flat Rate – Invoice Based – Similar to standard VAT where you account for VAT at the point of sale but the VAT calculates using a fixed percentage of your total turnover.
Flat Rate – Cash Based – Similar to VAT cash accounting where the VAT is accounted for when money is actually paid or received for goods or services. In this case the VAT calculates using a fixed percentage of your total turnover.
You can change the VAT scheme your software is using, but before doing so you should read Switching VAT schemes
If you are unsure which VAT scheme to choose, please contact HMRC
Flat Rate
This box only appears if you have selected UK Flat Rate as your VAT scheme.
This is the VAT rate percentage HMRC advise you to use.
The VAT percentage is based on a trade sector. The correct sector is the one that most closely describes what your business will be doing in the coming year.
If you are not sure what this percentage should be, please contact HMRC
Validate VAT Number
Your EC Sales List Submission (ECSL) must include your customers’ country codes and VAT registration numbers.
If you want to validate EU VAT numbers for all EU member countries, Select this check box.
Enable Making Tax Digital for VAT submissions
Sage 50cloud Accounts – If you’ve registered with HMRC for Making Tax Digital (MTD), you must select this check box before you make your first MTD VAT Return submission.
EC Sales
If you are registered for VAT in the UK and supply goods or services to customers in the EC, you need to submit an EC Sales List (ECSL). The information provided on the ECSL is used in the UK and by other Member States to ensure that VAT has been correctly accounted for, on the sale of goods and services within the EC.
If you have more than one company, you must submit an ECSL for each company.
If you want to submit your ECSL to HMRC online, you must complete this section.
Error Threshold
From the drop-down list, choose your error threshold.
This determines whether the error tolerance setting for an ECSL submission is set to thirty or zero per cent.
Zero per cent means that you will accept zero tolerance for submissions, in which case the submission is likely to be rejected wholesale, when the first error is encountered in a submission line.
The default setting, as per HMRC recommendation, is thirty per cent.
Branch Identifier
Enter the three digit number, representing the EC sales list branch identifier. This number is provided by HMRC.
The default number is 000.
Branch Postcode
Type the EC sales list branch postcode you registered with HMRC.
eSubmissions Credentials
The following credentials do not apply to Making Tax Digital VAT Return submissions.
User ID
Enter your User ID in this box, defined as your Government Gateway Account Username when you set up your account.
Password
Type your password in this box, defined as your Government Gateway Account password when you set up your account.
Confirm Password
Retype your password in this box, defined as your Government Gateway Account password when you set up your account.
eSubmissions Contact Details
The following credentials do not apply to Making Tax Digital VAT Return submissions.
Forenames
Enter your first or given names in this box, as defined when you set up your Government Gateway account.
Surnames
Enter your last or family name in this box, as defined when you set up your Government Gateway account.
Telephone
Enter your contact telephone number in this box, as defined when you set up your Government Gateway account.
Email
Enter your contact email address in this box, as defined when you set up your Government Gateway account.
EC VAT Descriptions
If you sell goods to customers in an EC member state, you can use this option to amend the descriptions that appear when you use an EC tax code on an order orinvoice.
This helps the EC customer to account correctly for the notional VAT on their VAT Return.
HMRC Bank Account
If you use Sage e-banking to pay your VAT liability to HM Revenue & Customs (HMRC), you need these details to successfully make an online payment.
Occasionally, HMRC change their bank account details. If you are notified of a change you can update the details by entering the revised sort code and account number.
Verification Settings
When you calculate the VAT Return you can run extra checks on your data by selecting these options. These checks help to ensure your VAT Return is correct before you submit the values to HMRC. Once you calculate the VAT Return you can view the results of these checks and then make amendments as required. Full information about each of these settings can be found in the VAT Verification Settings help
3. Before you can start submitting VAT Returns under MTD you must prepare your data to ensure that the values you submit under MTD are correct. This includes:
Ensuring you’re using the correct VAT settings. SKB 36914.
Note : do not tick Enable Making Tax Digital until you are ready to make your first submission.
4. Register with HMRC for MTD SKB 42782 – must have software and data ready before you sign up as once registered your next return must be via the MTD system.
5. Tick Enable Making Tax Digital when you are ready to make your first submission
6. On the menu bar click Settings, click Company Preferences then click the VAT tab
7. Put tick in box Enable Making Tax Digital for VAT submissions.
Processing in Sage 50 for the Construction Industry in Ireland
In the construction industry in Ireland, there are two schemes run by Revenue to collect taxes
Relevant Contracts Tax (RCT) and
VAT reverse charge
For both of these schemes to apply there are specific criteria that must be present and exact definitions are available on the Revenue website. In summary, there must be a principal contractor and a subcontractor engaged in a relevant contract to carry out construction operations. Either or both of these schemes could apply to any given contract eg. a subcontractors invoice could be processed using Reverse charge VAT (T20 in Sage) and RCT at 35% could be deducted from the subcontractors payment and remitted to revenue on their behalf. Below is an overview of each:
Relevant Contracts Tax (RCT)
RCT is a withholding tax that applies to certain payments by principal contractors to subcontractors in the construction, forestry and meat-processing industries. The rates of tax that can be withheld are 0%, 20% and 35% and will depend on the subcontractor’s compliance record with revenue. All RCT transactions must be submitted through the Revenue Online System (ROS).
Value Added Tax (VAT) is normally charged by the person supplying the goods or services. However, under the VAT reverse charge scheme for construction, the person receiving the goods or services (the principal contractor) calculates VAT and pays it directly to Revenue. The principal contractor accounts for VAT as if they had supplied the service. This is known as VAT reverse charge. It applies to subcontractors involved in the construction industry only.
Sage 50
Follow instructions below to process either or both In Sage 50.
You must first find out if you will need to deduct RCT for this subcontractor and at what rate 0%, 20% or 35%. If RCT is to be deducted follow instructions below for RCT and
Find out if VAT reverse charge applies. If yes follow instructions below for VAT reverse charge.
If VAT reverse charge applies then you will receive a VAT invoice from the subcontractor showing nil VAT and a statement on it saying that VAT will be accounted for by the principal contractor. You must then use tax code T20 Reverse Charge when processing the subcontractors invoice in sage and this will post both a sales VAT and purchase VAT on the VAT return. Ensure T20 vat code is set up correctly with reference to the correct rate (usually 13.5%). VAT is applied to the full net amount of the invoice prior to any RCT deductions.
If you are the subcontractor
If VAT reverse charge applies then you should generate a VAT invoice for the principal contractor showing nil VAT and a statement on it saying that VAT will be accounted for by the principal contractor.
In Sage this sales invoice should be processed using tax code T20. This will put the net value of the sale in the Information only box at the bottom of the VAT return called – Total value of sales, excluding VAT. Using T20 on the sales invoice also prompts the sage standard invoice layouts to insert a narrative on the invoice to say that the VAT is accounted for by the customer as is the requirements under the reverse charge VAT rules.
