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Does anybody know a good reference on where I can get information on the different VAT codes on sage and what would fit into the categories. In particular zero rated (T0) T2 exempt and T9.

Reason being that as a book-keeper I get very conflicting information from various clients accountants which has just now left me feeling like I am no longer sure what's right and what's wrong.

Many thanks


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By gbeman
08th Jan 2009 11:51

'out of scope' confusion
anyone reading this maybe confused by various comments about 'out of scope'.

T0 - is zero rated (but still included in your tax return / boxes 6/7)
T2 - is exempt (but still included in your return boxes 6/7)
T9 - out of scope/not applicable (not included anywhere in return)

in the case of the gardner who is not registered for vat and issues an invoice for services - that invoice does not include ANY type of vat, he is not registered. so the transaction is 'out of scope' or 'not applicable' therefore T9 must be used.

if a company/individual is not registered - ALL their invoices will be T9.

if somebody is registered and does not charge vat, the invoice should state whether it is exempt (T2) or zero-rated (T0).

my beef is how to determine what code to use for an EC customer when no goods or services are supplied out of the UK?

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to Portia Nina Levin
27th Nov 2012 14:55

Sorry but the gardner would be treated a T0 and not T9 as you stated above.

T9 is used for insurance, rates, bank payments etc totally outside scope of VAT.

The gardner could become vat registered when his turnover exceeds the threshold.

If a person is not registered for vat but produces an invoice it still needs to be included in your vat return. You would probably use the T0 code for inputting that invoice.

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07th Oct 2005 18:25

Accounting software, NOT knowledge alternative!
I am afraid that this thread highlights something that is obvious to experienced accountants, i.e. that accounting software is a tool to be used to accumulate accounting data. It is not a cure-all for inadequate knowledge on the part of the user.

Of course the marketing thrust of the likes of Sage is targeted to maximise their sales, so they would like as many people as possible to think that little or no knowledge will suffice. However it will rapidly become apparent, AFTER the purchase of course, that this isn't quite so!

My advice is to get a firm understanding of the basics of VAT under the belt, then look at the way Sage allows you to apply this knowledge. The codes are not etched in stone; the ones supplied are only a basis for a quick startup. You can create more if you chose, but you need to understand the theory first.

There, I've finished my rant!

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By Anonymous
07th Oct 2005 15:15

vat codes
that's right ..sage doesn't give any information what should go within each group and it seems to be a grey area that is really hard to get clarification on .... yet in my opinion it is so important to get it right.

What does everyone do?! take a guess??!

Is there nothing published that gives an exhaustive list?!?

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06th Oct 2005 18:11

VAT Codes on SAGE
SAGE will not help you with VAT codes.

You really need to understand the VAT rules.
e.g. if you have a purchase which would normally be standard rated but you do not have a bona fide VAT invoice then you would need to Zero rate it.

This is an area where a little knowledge is very dangerous and can cause people to go broke.

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30th Sep 2005 17:24

VAT Codes
Transactions relating to financial charges, for eample, credit charge, bank charges, insurance, leasing charge which are not normally VAT are also classified under the T2 code.

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03rd Oct 2005 10:36

EC transactions?
It's a while since I taught Sage, but if I remember rightly one can set up as many (within reason) VAT codes as you like. If the user trades with the EC they may find it useful to set up, and link to EC customers/suppliers, a seperate code for transactions with EC companies, even though they are technically Zero Rated. This can make analysis easier when it comes to filling in VAT returns and EC Sales lists and the like.

I'm not sure what provision Sage already make for EC stuff, but the above may still be useful.

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04th Oct 2005 11:59

VAT Codes - Know how you feel
I have had a similar problem and know how confusing it can all get. Until a very nice gentleman let me have a copy of his summary, a short version of which follows:

T0 Food, Sewage disposal/water, Books pamphlets and brochures, Newspapers, Maps etc..

T2 Post office postal costs, Insurance, Bank charges, Professional memberships, finance charges

T9 Bank Transfers, Salaries, PAYE/etc, Insurance claims, Loans, Dividends, Stock Exchange Dealings (though this may have changed), MOTs vehicle licence duty, Local authority rates.

This is not exhaustive but gives an indication. Other expenses are T1.

Sage does give some help regarding this if you search for The Tax Codes Tab

Hope this is of some use to you.

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28th Sep 2005 12:19

Sage VAT Codes
Sage Line 50 help file provides some basic information.

T0 zero rated transactions:
Used for any VATable Input (purchases) or Output (sales) transactions at rate of 0%. Sales and purchase values are included in box 6 and 7 of VAT 100 form.

T2 exempt transactions:
Used for transactions that are generally VATable, but are exempted for a specific organisation or event. e.g. a charity organisation with exemption certificate. Sales and purchase values are included in box 6 and 7.

T9 transactions not involving VAT:
Used for transactions not to be included in the VAT Return, e.g. payroll journals and payments. Values are not shown in any boxes within the VAT 100 form.


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03rd Jan 2008 16:35

I was right about tax codes
Clive Smith, wrote on 25 October 2005 @ 11:04 AM

trader below threshold is outside scope for VAT
In reply to Laura Landmark's question. I spoke to HMRC who disagreed with Alan Blake Thomas advice who originally answered my question.
HMRC advice say a transaction for a trader not registered because of below threshold is outside the scope of VAT. Therefore based on Sage's list of codes it should be T2 and not T0 zero rated as Alan wrongly suggested. A summary of Sage codes is below.

I have confirmed with HMRC that a purchase which includes VAT is "vatable" and NOT Outside the Scope of VAT whether or not the supplier is VAT Registered or not. If you do not have a VAT invoice for something which includes VAT then you must treat the total of the invoice as ZERO rated. This then goes in as code T0. If however the supply was of a VAT Exempt nature then of course you could use code T2 but it still needs to be included in the figures for box 7 on the return

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02nd Jul 2015 11:58

Hi please can anyone help me on this matter, we have raised an action against one of our clients for unpaid debt, the invoices relating to this action (i.e Sheriff Court and Sheriff Officer) have been entered onto our client account as these fees will eventually be owed by the client, however as we the company must pay for these up front, I have entered these payments as bank payments thus still leaving an outstanding amount on our client account.

Could anyone suggest if this is correct, I have also recorded the bank payments as T1 which are showing on my vat return, is this correct and if not could anyone suggest a better way.

Any help would be appreciated.


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