FURTHER GUIDANCE FOR CLIENTS USING COMPUTERISED ACCOUNTING SYSTEMS

For those using invoice accounting

The change in VAT rate should be relatively easy to implement. Once all November invoices have been raised, change the setting on your software to reduce the standard rate from 17½% to 15%. All sales invoices should then be correctly charged at the new rate.

If you consider it likely that you will invoice at the old rate after raising some invoices at the new rate, take care to switch the standard rate back to 17½%, but then also remember to revert to 15% once the November invoices are raised.

WE RECOMMEND that you should consider using a different VAT code for the new rate, but beware of the system's default setting. It would probably be advisable to switch the default rate to 15% once the bulk of November invoicing is complete, and create a new tax code for the 17½% rate.

When posting supplier invoices, ensure that the correct VAT code is used, or manually override the VAT amount if your system allows you to do this. Again, two separate VAT codes will make this process easier.

For those using cash accounting:

More advanced software will automatically claim or declare VAT at the correct rate, as long as the sales or purchase invoice is entered at the correct rate. No further action should be necessary.

Less sophisticated systems will require the user to take a great deal of care to ensure that VAT is accounted for at the correct rate.

SPECIFIC PACKAGES

SAGELINE 50 - Versions 11 onwards

SAGE INSTANT - Version 10 onwards

To change the default VAT rate setting, go into Settings, select "Configuration", and select "Tax Codes" Alter T1 to 15.00, and perhaps use a spare code (say, T3) and set this to 17.50. Also ensure that a tick is entered in the box "Include in VAT return" when setting up the new code. Before exiting, click "Apply", then "Close", but click "No" when asked if you want to Save. Then use T3 whenever you need to enter an invoice at the old rate.

SAGELINE 50 and SAGE INSTANT - Older versions

To change the default VAT rate setting, go into Settings, and select "Tax Codes". Alter T1 to 15.00, and then follow the procedure above to create a new code and to save the new settings.

QUICKBOOKS

To change the default VAT rate setting, go into Lists, select "VAT Codes List" and change the "Standard" code to 15.00. Create a spare code (say, "Old Rate") and set this to 17.50. Use the "Old Code" whenever you need to enter an invoice at the old rate.

EXCEL SPREADSHEETS (GENERALLY)

Consider creating an additional VAT column in both your sales/receipts and invoices/payments sheets and use the new column for 17½% invoices, with the original column used for the 15% rate.

EXCEL SPREADSHEETS (DESIGNED BY BUSBYS)

If you use a spreadsheet provided by us, please do contact us for specific help and guidance. Our spreadsheets were not designed to cope with a change of VAT rate, as the 17½% rate has been in place for over 15 years. We will be happy to alter the design of our spreadsheets to cope with the change, although we may have to make a small charge for doing this. As we expect the VAT rate to change again, we will ensure that our changes are designed to make it easy to change VAT rates in the future.

Every business has a slightly different way of using computerised accounting systems. No newsletter of this type can cover all eventualities, so please contact us for specific advice relevant to your accounting records.