Irish VAT Change

logo

 

Sage 200cloud Professional:

Irish VAT Change
— reduction from 23% to 21% —

Summary

The Irish government has announced a lowering of the standard rate of VAT for Ireland as part of the Job Stimulus Package. The standard VAT rate will be lowered from 23% to 21% for 6 months effective 1 September 2020 through to 28 February 2021.

Description

FIRST A NOTE: This article provides general rather than specific guidance to assist all of our customers. We always do our best to make sure that the information is correct but as it's general guidance, no guarantees can be made concerning its suitability for your particular needs. The information is valid at the time of publishing and is provided without any warranty of any kind, express or implied. You should take professional advice if you require specific guidance on your individual circumstances, for example to ensure that the results obtained from using our software comply with statutory or regulatory requirements. For VAT, customs and excise and duties enquiries you should contact the Revenue Irish Tax and Customs via their website at https://www.revenue.ie In no event will we be liable to you for any direct, indirect, consequential or incidental loss or damage arising out of or in connection with your use of the information provided.

What's changing?

On 23 July 2020, An Taoiseach, Micheál Martin, announced the July Job Stimulus Package. This is a programme of initiatives and incentives designed to help businesses re-open, get people back to work and promote confidence. As part of this programme the standard VAT rate will be lowered from 23% to 21% for 6 months effective 1 September 2020 through to 28 February 2021. Full details can be found here - GOV.IE Guidance

Resolution

CAUTION: We recommend you print and post purchase invoices that are presently in the system that have been invoiced at the old rate of 23% before following any of the advice on changing the VAT rate. If you amend an order after the VAT Rates have been changed, this will correctly recalculate the VAT for the order. This will also be the case if you run Balance Ledgers on Commercials to Fix – it will revalue all non-complete orders to the newly amended rate.

To change the VAT Rate in Sage 200

To change the standard rate of VAT you will need to do the following:

  • Open Accounting System Manager > Settings > VAT Rates.
  • Change the Std Rate code to 21%.
  • Change the EC Std PLcode to 21%.

To credit a sales invoice at the old rate

There may be occasions when you need to credit sales invoices at the old VAT rate. If you need to do this, you should create a new tax code at the old rate of VAT. You can do this as follows:

  • Open Accounting System Manager > Settings > VAT Rates.
  • Click
  • Enter a code number
  • Under Name enter a description of your invoice.
  • Select the VAT Return check box.
  • Select Not Applicablefor EC Terms.
  • Enter the %rate of 23%.
  • Ensure relevant nominal input and output account codes are selected.

Note: - You may need two new codes, one for goods for resale and one for goods not for resale.

To enter late supplier invoices or supplier purchase orders

If you receive an order from a supplier that you need to enter at the old rate of VAT, ensure that when you enter the order, you select the relevant tax rate.

Supplier invoices dated prior to the 1st September should be recorded using the relevant tax rate.

To create an invoice at the new rate of VAT

The invoice will post correctly at the 21% rate once you complete the section To change the VAT rate in Sage 200 

Observations

Existing Sales & Purchase Orders

Existing sales and purchases orders entered into the system can be viewed using the View Order option. Caution should be used when selecting to Amend Order once you followed the section To change the VAT rate in Sage 200.  Amending an order and either saving or closing will recalculate the VAT at the new rate.

Copy SOP Order

If you copy a SOP order that was created before you followed the section To change the VAT rate in Sage 200, ensure that you check all values on the order as it will calculate the VAT at the new rate on the order created by the copy.

Recording Payments in Advance

We would recommend that any orders entered in the system before the change in tax rate, that are not complete, and have advance payments associated with them, are checked to ensure that the increase in VAT has not resulted in the payment value being less or more than the value of the goods.

Project Accounting

The same general principles of this article apply to Project Accounting. It is recommended that Invoices are updated to the Sales Ledger before the VAT change takes place.  Behaviour of Draft Bills differs to the Invoice. If you amend or re-print a Draft Bill, the VAT will be recalculated at the new rate of VAT.

For additional information, contact DB Computer Solutions:

info@dbcomp.ie                                 061 480980

Comments are closed.