I am processing a EU service acquisition - Sage advises Tax rate T24 should be used as this will show the VAT in boxes 2 & 4 on the tax return - with a net effect of zero. I have posted the transaction but the value is not the same and it doesn't appear in box 2, its included in box 1. How can I get a T24 transaction to appear in box 2 instead of box 1? I'm also confused why my VAT value has changed from £591.17 to £472.94
The transaction is as follows:
Value of service: £2955.87
VAT: £591.17
Net: £2364.7
The value on the supplier account is correct, also the net value in NL is correct but the VAT value is showing in Box 1 & 4 as £472.94??
Please help.
Replies (13)
Please login or register to join the discussion.
T24
I think the box 1 entry is correct for an EU service, see http://www.hmrc.gov.uk/vat/managing/international/imports/importing.htm#3
The T24 tax code is linked to the T1 code so Sage is calculating a notional amount of VAT at the 20% standard rate on the net value of £2364.70. Hence the £472.94 appearing on the return.
The £591.17 has been debited to the Purchase Tax Control account but does not get included on the VAT return because the transaction uses the T24 tax code.
Your EU supplier has charged you VAT at their local rate which you cannot reclaim on your UK VAT return. Either use £2955.87 as the net value for the invoice or go back to the supplier and get them to invoice you without VAT.
T8 instead of T24
I have used sage 50 for years but must admit I have never heard of T24.
We have always used T8 for EU purchases (T4 for EU sales)
Using T8 put entries into/effects boxes 2,3,4,5,7,9, but has no impact on the actual amount payable.
@zeofiles
There is no a much more straightforward way to recover EU VAT, described here: http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_ShowContent&id=HMCE_PROD1_029943&propertyType=document
Reverse charge scheme
Sorry, I missed that it was a reverse charge - a scheme I am not particularly up to speed on with I’m afraid.
Looking at our 2013 Sage 50, tax code T24 although headed as ‘purchase of services from EU suppliers’ the reverse charge box isn’t ticked.
However, it is on T20 which is titled ‘reverse charge’
So maybe either use T20 or Tick the reverse charge box in T24
T24
I deleted transaction, ticked the box in T24 and re-entered the invoice, putting £591.17 as the VAT value but when I re-ran the VAT return it still shows as £472.94 in box 1 & 4 (there are now 4 entries in box 4 although there is only one transaction).
confused.com
If you enter a purchase invoice using tax code T24 the VAT amount should be zero. Like T8 it is meant to be used when the EU supplier knows that you are VAT registered and has not charged any VAT.
Boxes 1 and 6 are correct for recording the output tax on a supply of services. Box 2 should only be used for supplies of goods.
Tax code T24 is the correct code to use. It will include the net/VAT amounts as an output in boxes 1 & 6 and as an input in boxes 4 and 7.
They should show on the detailed report. On mine they are shown between the T22 sales invoices and the T5 sales invoices.