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VAT code for non-VAT registered suppliers

  • 4 posts
  • # 105687

Hello,

I hope everybody is having a nice weekend despite the weather.  Smile

I wonder if anybody knows what VAT code should be used in Sage for non-VAT registered suppliers? HMRC definition is pointing towards T9, however in such a case those purchases would not appear on a VAT return in box 7. Perhaps T0 is the correct one? I am confused, because my training provider doesn't cover this topic in their books. Can anybody help, please?

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  • # 105688

Svetlana said:

Hello,

I hope everybody is having a nice weekend despite the weather.  Smile

I wonder if anybody knows what VAT code should be used in Sage for non-VAT registered suppliers? HMRC definition is pointing towards T9, however in such a case those purchases would not appear on a VAT return in box 7. Perhaps T0 is the correct one? I am confused, because my training provider doesn't cover this topic in their books. Can anybody help, please?


 Hi Svetlana,

I always read the posts on here but this is the first time i've given any advice!

T9 should only be used for items that are not in any way related to VAT. ie. Payroll or loan repayments.

I read a discussion on here previously about whether vatable supplies from a non vat registered supplier should be posted as T1 (I think thats the standard vat code, my mind has gone blank now) and i think I would agree with that. Obviously the vat amount would be zero regardless and the vat box when posting the invoice  would be adjusted accordingly.

My conclusion is that either T0 or T1 would ok, and both would be included in box 7. Going by that previous post, there are a mix of people going for either of those.

 

I hope I have helped even though i've not been completely decisive!

Mike

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  • # 105689

Hi Svetlana

If you log in to Sage you can use the ask.sage knowledgebase these kind of questions.

I asked exactly the same question yesterday for a client and we looked on ask.sage and they recommend that a non vat registered purchase should be posted as T9 as it is out of scope for VAT.

T0 is for supplies that are zero rated (ie childrens clothing).

Hope that helps.

 

Victoria

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  • # 105692

vik said:

Hi Svetlana

If you log in to Sage you can use the ask.sage knowledgebase these kind of questions.

I asked exactly the same question yesterday for a client and we looked on ask.sage and they recommend that a non vat registered purchase should be posted as T9 as it is out of scope for VAT.

T0 is for supplies that are zero rated (ie childrens clothing).

Hope that helps.

 

Victoria


 Hi Victoria,

If T9 is used, then the entire transaction will be omitted from the VAT return, therefore box 7 "Total value of purchases and other inputs excluding any vat" will be incorrect.

Regards,

Mike

  • 4 posts
  • # 105696

Hi guys,
 
Thank you for responding to my query.
 
This is it - you've got  a dilemma! If you go by what is said on HMRC site, then "goods and services are outside the scope if they are supplied by a business which is not registered and is not required to be registered for VAT". Based on that it looks like you have to use T9 for those purchases from non-VAT registered suppliers. And those purchases will not appear on your VAT return.
 
Some accountants say they are posting the above purchases as T0 in their daily routine and never experienced any problems with audit or taxman.  
 
Perhaps the best solution would be just to amend one of 99 Sage VAT codes and set a "Non-VAT registered business" tax code?
 
I wonder if ICB could comment on the above matter and clarify it for us, could they?
 
Thanks


Edited at 28 Feb 2015 11:18 PM GMT

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  • # 105697

This is one of those questions which always seems to provoke different answers. Personally I would post to a T1 code with nil VAT, the VAT inspectors I have had dealings with are happy with this as the net figure is then populating the VAT return correctly. The supply does not become outside the scope simply because the supplier is not VAT registered. 

If you phone HMRC and ask their advice - they will give you as many variations as you have found on here!! 

Take it back a step, think how you would deal with it if you were entering to a spreadsheet or old fashioned VAT book and then follow that through!



Edited at 01 Mar 2015 11:07 AM GMT

  • 25 posts
  • # 105698

Just to jump off n on this conversation (sorry) im still a little confused;

 

I run my own ghost hunting business as a partnership as well as looking at going into bookkeeping just passed my BA4 😃

however my ghost hunting company is not vat registered and we have bought stuff from suppliers who are vat registered.

 

I know we cannot claim any vat back. It should I still be using T1 against them purchases So vat is recorded as part of our accounts even though we are not claiming it back or charging vat on sales, or should I use T0 so it is not reported at all?

i think it's usefull to still record vat as it will give us an idea if we would benefit from going vat registered, but I'm not sure how this will affect sage at year end when we don't pay a vat liability cause we have already paid it as we go.

cheers

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  • # 105700

EJL666 said:

Just to jump off n on this conversation (sorry) im still a little confused;

 

I run my own ghost hunting business as a partnership as well as looking at going into bookkeeping just passed my BA4 😃

however my ghost hunting company is not vat registered and we have bought stuff from suppliers who are vat registered.

 

I know we cannot claim any vat back. It should I still be using T1 against them purchases So vat is recorded as part of our accounts even though we are not claiming it back or charging vat on sales, or should I use T0 so it is not reported at all?

i think it's usefull to still record vat as it will give us an idea if we would benefit from going vat registered, but I'm not sure how this will affect sage at year end when we don't pay a vat liability cause we have already paid it as we go.

cheers

If you are not VAT registered you would not be using any of the codes as you have no need to produce a VAT return - I have two businesses that I look after one of which is VAT registered, one which is not. The Non-VAT registered business I record everything on sage but it all goes down as a T9 code which is the default when you tell sage that the company is not VAT registered. if I sell something from business 1 (non-vat registered) to business 2 (vat registered) - say I hire the chainsaw from co 1 to co 2, company 1 would draw up an invoice for £300 with no VAT shown, looking at the nominal record for hire charges it would show a £300 credit with a VAT code of t9. This invoice would be recorded under hire charges on the second company with a t1 code but showing nil VAT, so the nominal record for hire charges would show £300 debit with t1 but there would be nothing populating 2201. The VAT return would show 0 box 4 and £300 box 7. there is nothing wrong in using T0 in this case either as both correctly populate the VAT return. 

I personally would not be recording the VAT separately in your case as you should record everything gross. I suppose you could at the year end journal the VAT back to the different nominals - hope that helps.

 

  • 25 posts
  • # 105702

Thank you Louise 

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