VAT rate change for SAGE users

The standard rate of VAT is to be reduced from 1 December 2008 to 15% from 17.5%. This will apply until 31 December 2009.

For those using SAGE accounts it will be necessary to adjust the VAT rate to accommodate this change and we would recommend that the following action be taken:-

• Process to end of November 2008 as far as possible before processing December
• From the front screen of SAGE ...........
• Click on Settings – Configuration – Tax Codes
• Highlight the T1 tax code
• Then click on edit
• Then replace the 17.50 rate with 15.00
• Then click OK
• Then click apply

The new T1 tax code will then calculate VAT at 15% rather than 17.5%. If you subsequently process any transactions relating to pre 1 December you will need to manually over-ride the VAT amount to the invoice amount to ensure you pay/claim the correct amount of output/input VAT. (Similarly, if you process any transactions in December before adjusting the tax rate, you will also need to manually over-ride the VAT amount).

If you have recurring transactions set up on your bank module, you will need to be careful as some of these will change from 1 December due to the change in the VAT rate. Any recurring payments set up to pay an invoice dated before 30/11/08 will be fine, but any set up for transactions after 01/12/08 should be amended. Remember to check your direct debits after 1 December and ask for an updated Direct Debit VAT payment Schedule if applicable.

Anyone using cash accounting for VAT will not need to do anything further than this as the system will calculate the VAT on the amounts as originally posted.

If you have any problems or any questions please contact Emma Lindley, Jo Hall, Matt Kendall or Mike Hudson.