Sage 50 – Standard VAT rate reverts to 23% on 1st March 2021

Standard VAT rate reverts to 23% on 1st March 2021

 

As part of the July 2020 Stimulus Package the Minister for Finance announced a temporary reduction in the standard rate of VAT for a six month period.  On 1 September 2020, the standard rate of VAT was reduced from 23% to 21%. The Minister recently confirmed that the rate will to revert to 23% on 1 March 2021.

In September you created new tax codes to allow for the 21% and now you need to revert back to the 23% codes.:

 

Temp
21% 23% Description
T39         T1 Standard rated sales and purchase of goods for resale
T40        T8 Standard rated purchase of goods from suppliers in EC resale
T41       T24 Standard rated purchase of services from suppliers in EC
T42       T11 Standard rated sales and purchase of goods for non-resale
T43        T18 Standard rated purchase of goods from suppliers in EC non-resale

 

These are Sage Standard Codes but you may have different ones set up on your system.  If these are not your codes then you will need to revert back to your original 23% codes.

 

How to change your Customer/Suppliers and Product Tax Codes using Batch Changes

 

Certain records throughout your system, will refer to your 21% tax codes (eg: Customer Accounts, Supplier Accounts). When the moment is right, you need to change those to refer back to your original 23% codes. The right time to do this would be any time after 28th Feb, and after you have completed processing your remaining 21% transactions. See below for information on how to do this..

You can filter your Customers/Suppliers and Products by ‘Default Tax Code’ as follows:

1. Select Customers

2. Click on Filter and Enter the following filter:

‘Where Default Tax Code is Equal to  T39’-21%

 

3. Click Apply to set the filter

4. Ensure no record is selected – Click Clear

 

5. Click Swap to highlight all your Customers

 

 

4. Click on Batch ChangeDefaults  and change the Tax code (in this example case T1) and  Click Save.

 

Repeat these steps for each tax code, Suppliers and Products.

 

Areas To Consider When Changing VAT Rates 

 

1. Recurring Entries – Sales, Purchase Orders, Invoices and Credits:
  • Ensure you have processed all entries prior to the VAT rate change.
  • Click the relevant list i.e. Invoices, Sales Order or Purchase Order
  • Click New or New Invoice and Recall and then Load.
  • Change the VAT Code, Click OK
  • Memorise again with a different name
    .
2. Recurring Entries – Batch Invoices and Credits:
  • Ensure you have processed all entries prior to the VAT rate change.
  • Click Batch Invoice & Recall the batch.
  • Change the TAX Code.
  • Memorise again with a different name.

 

3. Recurring Entries Bank Transactions:
  • Ensure you have processed all entries prior to the VAT rate change.
  • Click Bank Payments & Receipt’s & Recall.
  • Change VAT Code and click OK.
4. Outstanding Orders & Invoices:

All outstanding invoices and orders may need a VAT code change if not completed before the VAT rate change.

5. Special Product Codes (S1 and S3):

If you use the Special Product Codes S1 or S3 you can amend the default tax code for these by going to Settings, Invoice and Order Defaults, Options and change the Default tax codes in the Specials Items section at the bottom and select OK.

 

6. Other Considerations:
  • 3rd Party software importing records into Sage 50 – need to ensure you are in sync with codes..
  • Any bespoke VAT reports may need to be reviewed.
  • EU related codes for notional VAT.
  • Be mindful of unallocated items when you have two different VAT codes on the account.
  • Sage 50 Irish Vat codes –> see Sage 50 Irish VAT Codes
  • Outstanding SOs or POs will not automatically be updated this must be done manually
  • Changing the default codes for new customers and suppliers.

This can be done in Settings-Customer/Supplier defaults and changed the Std. Tax code back to T1 or whatever Tax code you require to be set for new customers by default.

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