The UK Government recently announced a new policy to reduce VAT, temporarily, across the hospitality, holiday accommodation and attractions industry.
This article details the changes you need to consider within Sage 200. For any specific legislative queries please contact HMRC. There are some useful links throughout the article to information on www.gov.co.uk.
In the Chancellor’s summer statement, on July 8th 2020, he shared the government’s plans to change UK VAT from 20% to 5% for hospitality, holiday accommodation and admissions to some attractions.
This change came into effect from July 15th 2020 and will run through until January 12th 2021.
The temporary VAT reduction means you will need to ensure any invoices you raise and record in Sage 200 are done correctly; depending on the classification of the goods/services. You can see which items are impacted here.
Specific government instructions around the VAT rate changes and how it impacts your day-to-day processing can be found here.
Considerations for Sage 200
Lower Rate VAT Code
You will need to ensure you have a lower rate VAT code of 5% set up in Sage 200. If you already have one (such as for fuel) this can be used. However, we would recommend you create a separate code specifically for this temporary change. This will allow you to track this separately.
To review and create VAT Codes you need to go to Accounting System Manager > Settings > VAT Rates.
Please watch our video here for further guidance.
Default VAT Codes
Customers and Suppliers
For transactions where your VAT code will default from the Customer / Supplier account you may want to review the Default VAT code set on the Trading Tab of the Customer / Supplier account.
This can be completed Manually:
For Customers go to Sales Ledger > Sales Accounts > Amend Account Details
For Suppliers go to Purchase Ledger > Purchase Accounts > Amend Account Details
If you are using Sage 200 Professional Spring 2019 or above, then you can use the Customer account Import routine to Update existing accounts. For ease Export the records first, change the VAT code against the records required and then import the files back in.
Please watch our video here for further guidance.
Stock Items
For transactions where the VAT code defaults from Stock Item records you may want to review the Default VAT Code assigned against your Stock Items.
This can be completed Manually:
Stock Control > Stock Records > Amend Stock Item Detail
If you are using Sage 200 Professional Spring 2019 or above, then you can use the Stock Item Import routine to Update existing accounts.
For ease Export the records first, change the VAT code against the records required and then import the files back in.
Please watch our video here for further guidance.
Outstanding Transactions
If you have outstanding transactions, where VAT is applicable but has not yet been posted / updated you may need to amend them if the tax point is on or after 15th July 2020. To understand the possible scenarios which effect you, you should find out the applicable ‘Tax Point’ or ‘time of supply’.
Further information can be found here.
In Sage 200 this may impact:
- Outstanding Sales / Purchase Orders
- Goods Despatched not invoiced
- Recurring items such as Order templates, Journal templates, Standing orders and Direct Debits.
Where can I find further information about these changes?
The government has published a policy paper available here.
If you have any questions about the temporary VAT reduction or your Sage 200 system, please fill out the enquiry form or call 01332 959 008.
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