VAT is normally charged on the full value of goods sold, but for second hand goods, such as cars, works of art, antiques and collectors items, your output VAT is calculated on the difference between the selling price and the purchase price of the goods. This is referred to as the Gross Margin.
To create a product record for goods included in the VAT Margin scheme
- Open the Products module then click Record. The Product Record window appears displaying the Details tab.
- Complete the Product Record window as follows:
- In the Product Code box, enter the product code to be used for the item.
- In the Description box, enter the description for the item.
- In the Supplier Account box, enter the supplier's account reference.
- In the Tax Code box enter T9.
- Enter other relevant information as required.
- To save the Product Record, click Save, or if required, to exit without saving, click Discard. The product record is created and the information clears.
- To close the Product Record window and return to the Products window, click Close. The Products window appears.
To adjust in goods included in the Margin scheme
- Open the Products module then click In. The Stock Adjustments In window appears.
- Enter the required information on the Stock Adjustments In window to record the purchase of the item. For example, to record a stock adjustment in for one car valued at £1000.
|Prod Code||Details||Date||Ref||Qty||Cost Price||Sales Price||On order||Free|
|CAR||Product desc||Date of purchase||Ref||1||1000.00||Product Record sales price||Amount on order||Qty available in stock|
- To post the adjustment in, click Save. The adjustment in is posted and the Adjustment In window clears.
- To close the Adjustments In window and return to the Products window, click Close. The Products window appears.
When you are ready to record the sale of this car, please refer to the following section.
To create a product invoice to record the sale of an item included in the Margin scheme
- Open the Customers module, from the links pane, select Invoice List then click New/Edit. From the Type drop-down list choose Invoice, from the Format drop-down list choose Product then complete the Product Invoice as follows: Open the Invoicing module then click New/Edit. From the Type drop-down list choose Invoice, from the Format drop-down list choose Product then complete the Product Invoice as follows:
- Enter the date of sale and customer account reference in the boxes provided. Note: If an account has not been set up for the customer you must create one now. For further information about creating a new Customer Record, to open the Help system, press F1.
- In the boxes provided enter the product code, a quantity of 1, the tax code as T9, and the relevant selling price. Tip: To open the Product Item Line to display the tax code, press F3.
- To save the information on the Product Item Line, click OK. The Product Invoice window appears.
- To save the Product Invoice, click Save. The Product Invoice is saved and the Product Invoice window clears.
- To return to the Invoicing window, click Close. The Invoicing window appears.
- Run the relevant Output tax reports.
- Once you have obtained the VAT figures, you can either manually add them to the box 1 and 4 figures on the VAT Return produced by Sage Accounts, or you can post a journal to add the box 1 figure into your VAT Return the next time it is calculated.
Sage 50 Accounts 2008 and above - Box 6 and 7 can be corrected by postings adjustments.
- The Output tax reports also show the gross sales and gross costs for each month. These figures are used to manually correct the box 6 and 7 figures on the VAT Return produced by Sage Accounts.
To run the Output Tax reportsNote: The Output tax reports calculate the total sales, total purchases and any output tax due on second hand goods for the specified period. There are 12 monthly reports. If you are calculating your VAT for more than one month you must run the relevant reports for the period, then add the figures together to produce your output tax due for the VAT period.
- Open the Company module, from the Links pane select Financial Reports then click Reports. Sage Accounts v11 and below - Open the Financials module then click Reports.
The Financial Reports window appears.
- Select the Output tax report for the relevant month, set the Output to Print, then click Generate Report. The Criteria window appears.
- In the boxes provided, enter the required stock code and stock category range, then click OK. The Print window appears.
- Complete the Print window as required then click OK. The Output tax report for the selected month prints.
Repeat steps 2 - 4 for any other months in your VAT quarter.
Note: If you have sold goods included in the Margin scheme at a loss you are not entitled to offset the loss against the profit you make on other goods.
To post a journal to record the VAT to be paid on your next VAT ReturnNote: In this example, the Output tax report calculates VAT to be paid to the HMRC as £150.00. This journal also updates the Sales nominal code that was used when the car was sold. If you produce monthly management reports, you should post this journal on a monthly basis before printing your management reports. Otherwise, they can be posted at the end of each VAT period.
- Open the Company module then from the Tasks pane, select New Journal. Sage Accounts v11 and below - Open the Nominal Ledger module then click Journals.
The Nominal Ledger Journals window appears.
- Enter the date and reference for the journal, then enter the relevant details to record the output tax, for example:
N/C Name Dept Details TC Debit Crebit 2200 Sales Tax Control Account 0 VAT Liability T1 150.00 Sales nominal code Sales nominal code 0 VAT Liability T9 150.00
- To post the journal, click Save. The journal posts and the Nominal Ledger Journals window clears.
- To close the Nominal Ledger Journals window and return to the Nominal Ledger window click Close. The Nominal Ledger window appears.
To manually correct the box 6 and 7 figuresSage 50 Accounts 2008 and above - Box 6 and 7 can be corrected by postings adjustments.
Box 6 - To correct the box 6 figure, please follow the steps below:
- Calculate the net sales figure for the month by subtracting the VAT on Profit figure from the Sales figure.
- Add together the net sales figures for all of the relevant months.
- Add the total net sales figure balance to the automatically calculated value in box 6.
- Add together the costs figures for each of the relevant Output Tax reports.
- Add the total costs to the automatically calculated value in box 7.