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Vat Codes in Sage: Difference between T2 and T9

I have been reading up on the web about which sage VAT codes to use when. Information is very conflicting on this

Could an expert AW member please clarify the following:

Which VAT codes should I specifically use for the following:

Insurance payments

Postage

Travel - Tube and rail fares

Travel - Taxis

Travel - Plane

Bank charges

Rents and rates

Entertaining

Any help appreciated thanks

Replies

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T9 does not show in VAT return

T9 is not included when the VAT report is run

T0 is the standard code to use when you want something included in the return, but which doesn't have VAT on it, such as the expenses below

Not sure how you are using T2

 

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Outside Scope - T9

Several of these are outside the scope of VAT. Use Code T9

Postage

Bank charges

Rents and rates

Entertaining

If the following are for business purposes:

Travel - Tube and rail fares- zero rated - T0

Travel - Taxis - Standard rated - T1

Travel - Plane - zero rated - T0

If for private use T9

T2 user defined is a user defined code that appears on your VAT return

For more info see
http://www.hmrc.gov.uk/vat/forms-rates/rates/goods-services.htm

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Sage VAT Codes - differences

T0 = vatable at 0%
T2 = exempt from VAT
T9 = outside scope of VAT (has nothing to do with VAT)

(you may also have T5 = reduced VAT)

T1 transactions will appear in your Sage VAT reports.

T9 transactions do not appear in your VAT reports at all.

T0 and T2 transactions will appear in your VAT reports for boxes 6&7 but will not affect the amount of VAT payable/reclaimable (since, the amount of VAT on these transactions is zero)

See also the link below, for how HMRC expect you to complete your VAT return:

http://www.hmrc.gov.uk/vat/managing/returns-accounts/completing-returns.htm

Louise
www.figurate.co.uk
www.happyaccountant.com

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Postage and other things...

I would agree with most of scallowag's tax codes.
However, I think that postage from the Post Office and bank charges are T2 (exempt) rather than T9 (out of scope)
(in practice, it obviously won't make any difference to the amount of VAT you can reclaim!)

Insurance is generally T2 (exempt)

Rent - land/property transactions are generally VAT exempt (T2), however, the landlord may have decided to "opt to tax" so that they can reclaim input VAT.  What does your rent invoice say (or in the absence of an invoice - ask your landlord, in the first instance)...

Louise
www.figurate.co.uk
www.happyaccountant.com

 

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Taxis are T1?

Whilst technically taxis are standard rated, how many taxi drivers have you met that are registered for VAT? You would have to get a VAT receipt too.

If you happened to meet a VAT registered taxi-driver, and he gives you a VAT receipt, then yes, it would be T1.

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Thanks for your replies

If I use T9 for both Exempt and Outside scope transactions, does it matter? I know that VAT is not affected but Box 6 and 7 would also not be filled in then.

Upto now I had been posting all bank charges, rent and rates, insurance, postage, travel etc as T9.

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who cares?
You are anyway an unpaid tax collector for the government. Even if you get it wrong, there's no loss of tax. When we had a vat inspection, the inspector pointed out that we'd T9ed everything (0%, exempt and our of scope) and very nicely corrected it for us. If he wouldn't have done, I doubt I'd have bothered. I still use T0 and T9 pretty much randomly, although I never use T2. Not that I don't know the rules, but what difference does it make?

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Do HMRC really mind?

I've wondered this for some time.

As it makes no difference at all to the actual amount of VAT declared,  is there any problem during a VAT inspection if  we have used t9 when we should have used t0?  Are we actually supposed to seperate zero rated from exempt transactions  ?

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It does make a difference

Goods that are zero rated are liable to VAT, just at a rate of 0%. T9 is for items that are outwith the scope of VAT.

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Hate to seem pedantic

But I agree with scalloway.

Imagine coding your salaries and wages to T0 instead of T9 and in doing so giving a wildy inflated figure to report in Box 7 of the VAT Return. If I saw that, quite a basic error, I would be inclined to wonder what other basics about VAT were missed. The amount of VAT payable may be unchanged, but it doesn't inspire confidence.

 

-- Kind regards Andy

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Yes I certainly see the point there

and would never code a transaction such as salaries or bank transfers to T0.

But my question is should we, strictly speaking, be coding zero rated purchases/sales differently from those that are exempt (using maybe T0 for zero rated and T2 for exempt)? Does the HMRC inspector really mind if we don't ?

 

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Hi,

Could someone please confirm what codes to use for the following:

rates - T2 or T9

health insurance - T2 or T9

bank charges - T2 or T9

pension 

Thank you

 

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Hello,

I believe the following to be accurate.

Rates - T9

Insurance - T2

Bank Charges - T2

Pension - T9

 

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