How to use Sage VAT Codes

Sage suggests the following attributions for VAT tax code to use:

T0 zero rated transactions
T1 standard rate
T2 exempt transactions
T4 sales to customers in EC*
T5 lower rate
T7 zero-rated purchases from suppliers in EC**
T8 standard-rated purchases from suppliers in EC**
T9 transactions not involving VAT***

* This tax code can be used for VAT-registered customers outside of the UK but within the EC. You must have the customer's VAT registration number entered on the customer record if you want to use the T4 tax code. If your customer is not VAT-registered, then you should use one of the standard UK VAT rates.

** These tax codes can be used for suppliers outside of the UK but within the EC. In accordance with VAT regulations, EC VAT rate codes used for purchases are given a 'notional' rate that is linked to a UK VAT Rate. For example, Instant Accounts's T8 rate for standard rated purchases from suppliers in the EC is linked to T1, which is the standard rate of VAT in the UK.

*** These transactions are not included on the VAT Return. Instant Accounts also uses T9 as the default tax code for all the routines that are non-vatable, e.g. journal entries and error corrections. If you want to change the function of T9, you will need to set up another tax code that is non-vatable, for Instant Accounts to use for these routines.

Posted in: VAT