Set up tax rates

Tax rates are normally used for UK business VAT Rates. They are accessed by Sage 200 modules in order to:

Analyse the rates to Nominal Ledger codes.
Analyse the rates to the VAT Return.
Read percentages for calculations in transactions.

In addition to tax rates, you will need to know the Tax number for any customer or supplier in the EC with whom you trade and who is registered for VAT in their own country. These numbers are entered on the customer or supplier account Trading tab, and customer tax numbers are shown on invoices. For more information, see Trading in EC countries.

Use the Tax Rate Details window to:

Set up all the tax rates which you intend to use.

Default tax rates

The following tax rates are available by default.

Code	Name	Description
0	Exempt	Exempt VAT, set at 0%.
1	Std Rate	The current Standard VAT rate.
2	Zero Rated	Zero rated VAT, set at 0%.
4	EC Zero SL	EC zero related sales of goods and related services.
5	EC Service	EC sales of non related services
6	EC Service	EC purchase of non related services.
7	EC Zero PL	EC zero rated purchase of goods and related services.
8	EC Std PL	EC standard rate purchase of goods and related services.

We recommend that you do not amend the default tax rates provided (apart from %, Input Acc. No. and Output Acc.No. boxes). If you need to, you can add your own tax rates.

Reverse charge tax rates for preventing carousel fraud in the UK

Reverse charge VAT is a term that covers both of the following scenarios:

Combatting the abuse of VAT legislation and preventing fraud in trade between businesses within the UK centres involving goods originating from the EC.
Accounting for VAT as a reverse charge on goods and services supplied to a UK business from an EC business.

The setup of tax rates is different in both scenarios. This topic describes setting up the rates needed to apply reverse charge VAT for prevention of carousel fraud in the UK.

For information on setting up tax rates to account for VAT as a reverse charge on goods and services supplied to a UK business from an EC business, see the help topic, Trading in EC countries.

Code	Name	VAT Return	EC Terms	%
Enter a unique code.	Enter a unique name.	Select the check box.	Select Reverse charge sales.	Enter the prevailing local tax rate.
Enter a unique code.	Enter a unique name.	Select the check box.	Select Reverse charge purchase.	Enter 0 (zero) %.

Enter the tax rates to be used for accumulating values for the EC sales or purchase boxes on the VAT Return for transactions between EC member states. Sage 200 uses default codes 4, 5, 6, 7 and 8 for these rates.
Specify input and output tax nominal accounts, if you want to override the Default Tax Input and Default Tax Output tax nominal accounts within the company's default nominal accounts.
Amend tax rates.

Amended tax rates are only picked up, by default, by transactions created after the rate has been amended.

To maintain tax rates

Open: Accounting System Manager > Settings > Tax Rates.

If you are creating a tax rate, select a blank line or click Add.

If you are amending an existing tax rate, select the tax rate.

In the boxes available, enter the details.

Code	Enter a number to identify the tax rate.
Name	Enter a name of up to 10 characters to identify the tax rate. For example, Export.
VAT Return	Select the check box if you want to include the value of tax accumulated under this code in the VAT Return. If you clear the check box and post vatable transactions to this code, the results are included in the Non Trading Vatable Transactions report. This report is produced with the VAT Return but can also be printed separately as one of the Nominal Ledger Account Analysis reports.
EC Terms	Select how the tax rate is to be treated for purposes of EC processing. If you are processing in the UK and want to prevent carousel fraud Select Reverse charge sales and Reverse charge purchase when you are trading in specified electronic devices (such as mobile telephones and computer chips) in the UK with another UK business and the value of your trade exceeds £5000 for a UK VAT registered customer. These two tax rates are not set up by default. If you set them up, set up the sales tax rate at your local VAT rate and the purchase tax rate at 0%. If you are selling in the EC Select Sales Goods and Related Services if you are selling goods to EC customers (outside the UK) and there are associated service costs such as freight charges. Values are included in the total on box 8 on the VAT Return. Select Sales Non-Related Services if you are selling services that are not related to any supply of goods, to EC customers (outside the UK). For example, legal services. If you are acquiring from the EC Select Purchases Goods and Related Services if you are acquiring goods from EC suppliers (outside the UK) that have associated service costs such as freight charges. Values are included in the total in boxes 7 and 9 on the VAT Return. Select Purchases Non Related Services if you are purchasing services that are not related to any supply of goods, from EC suppliers (outside the UK). For example, legal services. If none of the above Select Not applicable when no EC processing is involved.
% (Percentage rate)	Enter the tax rate percentage in the range 0 to 999.99. You do not need to enter the percentage sign, nor trailing zeros after the decimal point. For example, entering 17.5 will result in 17.50%.
Input Acc.No	Enter a Nominal Ledger account number, if you want to accumulate the tax values for the tax rate in a particular account. If you do not enter an account here, the values will be accumulated in the Default Tax Input account set up in the company's default nominal accounts.
Output Acc.No	Enter a Nominal Ledger account number, if you want to accumulate the tax values for the tax rate in a particular account. If you do not enter an account here, the values will be accumulated in the Default Tax Output account set up in the company's default nominal accounts.

If you enter the same nominal account number for both Input Acc. No. and Output Acc. No. and your company is registered for VAT, the balance of the nominal account will reflect the outstanding net VAT.

This does not include companies which operate VAT cash accounting (which is not supported by Sage 200).

To save the tax rates, click OK.

Other tasks

Default nominal accounts

Reference

Trading in EC countries