VAT Codes

The VAT Codes form is used to create the VAT codes you need when you post VAT transactions and adjustments. VAT codes are set up to update the relevant boxes on the VAT Return, update the EC Sales List (ESL) and Supplementary Declaration (SD) reports, and update the Reverse Charge Sales List (RCSL).

Caution: Leaving this form open will mean that other users will be prevented from accessing some areas of the product.

General tab

Box	Description
Country Type	This displays a code that identifies the country to which the VAT code applies. H for 'Home' country. This applies if the customers or suppliers are located in the same country as your company. R for a 'Registered' EC country. This applies if the customers or suppliers are located in an EC country where you are registered for VAT. U for an 'Unregistered' EC country. This applies if the customers or suppliers are located in an EC country where you are not registered for VAT. N for 'Non' EC country. This applies if the suppliers or customers are located in a country outside the EC.
Trans. Type	An option that determines the type of transaction to which the VAT code applies. You can select one of the following from a list: C for 'Reverse Charge Service' non EC. Use this for services received from suppliers outside of the European Union where the service must be accounted for using reverse charge procedures. For help with how to set up VAT codes for Reverse Charge VAT Accounting for Services inside the European Union, see the Setting up Reverse Charge VAT Accounting (Services) Help topic. F for 'Purchase - Unregistered EC Supplier'. J for 'VAT Adjustment'. This is available when the Country Type ='H' and Making Tax Digital for VAT is switched on using the System - Maintenance - Company Profiles form. These codes are relevant only when posting end of VAT period adjustments using the Adjust committed VAT form from the MTD VAT Centre. N for 'Beyond the Scope of VAT'. P for 'Purchase'. Use this for purchase transactions from suppliers that are VAT registered other than those specified by transaction type 'F' or 'R'. R for domestic reverse charge purchases. Use this for transactions from domestic suppliers where you must account for VAT using reverse charge accounting. What's domestic reverse charge accounting? You cannot use Reverse Charge Purchase codes for suppliers that are marked as VAT Inclusive. S for 'Sale'. Use this type if the VAT code is for sale transactions to customers other than those specified by transaction type 'U'. U for 'Sale - Unregistered EC Customer'. V for domestic reverse charge sales. Use this for transactions for domestic transactions where you must account for VAT using reverse charge accounting. What's domestic reverse charge accounting?
VAT Code	An identifier for the VAT rate. The can be a letter or number. The code is used in conjunction with the country code and transaction type, so you can use the same VAT code for both sale and purchase rates. For Country Types of "R" and "U", VAT Codes that are set to "Y" are used to apportion delivery charges on the SD report according to the weight (Net Mass) of each stock item on the transaction. This applies if you use the EC VAT module.
Rates and Dates	The percentage rate of taxation to be levied on the taxable value of transaction items associated with the code. You can specify two rates together with the date from which the rate becomes effective. This means you can enter a rate change in advance. Only one rate can be current.
Nominal Code	This only applies to home country VAT codes. A reference that identifies the Nominal Ledger account to which the value of taxation is posted for transactions associated with the VAT code. You can select from a list of account records that include 'VAT' in their description. Records that have a cost centre are not displayed in the list so these cannot be used. Nominal accounts are defined on the Nominal Ledger - Maintenance - Accounts form.
VAT Return Boxes	Click to select the box or boxes to which the value of goods associated with the VAT code is accumulated on the VAT Return. In most cases the boxes are selected for you and disabled. However, where boxes are enabled you can only select them if they are valid for the VAT Code, for example; if you are creating a VAT code for customers in the EU who bought goods from you, you can only select boxes 6 and 8.
EC Sales Listing (ESL)	This only applies if the EC VAT module is used. Tick the Goods Value = Supplies box if transaction values for this VAT code are to be included on the ESL. Tick the Process Item box if transaction values for this VAT code are either being sent to another EC member state for processing or being returned to another member state after processing. These transactions do not appear on the ESL report. Tick the Triangulation box if transaction values for this VAT code are involved in triangulation as an intermediary. Such transactions appear on the ESL report with a '2' in the indicator field. The ESL prints separate triangulation lines so that they are not combined with non-triangulation records. Tick the Services box if transaction values for this VAT code are for Reverse Charge services transactions. What's reverse charge accounting for services received from outside the UK?
Supplementary Declaration (SD)	This only applies if the EC VAT module is used. Select the options that apply to the VAT code concerning the movement of goods between EC member states. Tick the Pre-Process Item option if the items sent to or received from the EU member state are for processing. Tick the Post Process Item option if items analysed to this code are either being sent to another EU member state after processing or are being returned from another member state after processing. Tick the Goods Value = Supplies option if the goods value of sales or purchases analysed to this code needs to be included on the SD report.
Domestic Reverse Charge	Select for transactions that must be accounted for under the domestic reverse charge mechanism, but must not be included on the Reverse Charge Sales List. If this option is selected the reverse charge De-minimis level will be ignored during processing for both sales and purchase transaction.
Bad Debt Relief	Select for VAT codes that will be used to account for bad debt. These VAT codes can only be used from the System - VAT Processing - VAT Return Adjustments form. Bad debt relief allows businesses that have made supplies and paid VAT to HMRC to claim a VAT refund if they have not received payment from their customer. To claim the refund you must already have accounted for the VAT in your accounts and paid HMRC. You must also have written off the debt in your accounts. You claim the refund by updating Box 4 of the VAT Return. The debt must have been unpaid for six months after the later of: the time payment was due and payable the date of the supply. Bad debt relief also applies to businesses that have claimed VAT but need to repay it because they have not paid for the supplies of goods or services they have received. Please visit the 'VAT on bad debts' page on the HMRC website for details.
Postponed VAT Accounting	Select for VAT codes that will be used to process adjustments under the rules of the Postponed VAT Accounting legislation. The checkbox can only be updated if the VAT Trans. Type is a VAT Adjustment. These VAT codes can only be used from the System - VAT Processing - VAT Return Adjustments form. What is Postponed VAT Accounting?