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Clarification - VAT codes and Sage

I currently do the book-keeping for my husbands sole-trader, VAT registered business and use Sage Instant Accounts.

My Accountancy firm have completely confused me with regards to the T0, T2 and T9 VAT codes by giving me contradicting advice, so I am just seeking some clarification that the following is correct:

T0 - Postage costs i.e. stamps, Books and anything for which there is a VAT invoice which states that the goods are zero rated.

T2 - Bank charges, insurance (Vehicle and Liability) as these are exempt from VAT rather than 0 rated

T9 - Drawings, wages, national insurance contributions etc as these are outside the scope of VAT

Also, can anyone confirm whether Road Tax is T2 or T9. I presume T9 but am not 100% sure.

Thanks
Helena

Helena Kucharczyk

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25th Jun 2007 08:25

Use T9 for road tax & T2 for bank charges
Road tax is outside the scope of VAT so use T9. I disagree with Rehan, bank charges are exempt so use T2.

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By Anonymous
25th Jun 2007 15:25

VAT codes
Ditto postage - exempt so T2. But at the end of the day I take the view that if the VAT man came in to inspect, provided the entries are transparent (ie supported with paperwork), as long as there is no attempt to evade your VAT liability, then don't lose any sleep over it!

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By Rehan1
23rd Jun 2007 20:17

Sage Codes

Yes , i agree with you that there are some people who get confused when it comes to using Sage Vat Codes for the Transactions...

Answer to your question you are using the right codes as you mentioned , except Road Tax is Motor vehicle expenses use T2.

And for Bank Charges use T9.

Now here is the Logic when using codes .... you may know that Transactions with T9 Codes do not appear on tha Vat Return eg. Wages, Drawings, Bank Charges. AlwAYS ask yourself a question abt the Nature of expense should it be appeared on the VAT Reurn or not ... if not use T9.


Kind Regards.


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