Reverse Charge Journal - Sage

[Tzulie]

I’ve posted a purchase invoice in Sage (Version 11) that is subject to the reverse charge using a T8 tax code which appears in Box 2 of Sage’s VAT Return. I assume I have to do a journal to reclaim/cancel out the VAT due.
As Sage hasn't debited a tax account but has debited the purchase account (N/C 5000 in this case) with the gross amount, am I right in assuming I have to debit 2201 and credit 5000 with the VAT amount?

Any input on whether this is the correct journal entry I should make would be gratefully received.

 

[weebly_one]

If you do a VAT return in Sage and have the tax codes set up correctly it should all fall out in the wash when you do your VAT return - you should not have to do extra journals specifically. Just make sure you click on VAT transfer after you have backed up and reconciled the VATl. You did with tax code T8 put the whole value in the Net column and nothing in the VAT column?

 

[Tzulie]

I can now see that the transaction has appeared in boxes 2 and 4 (the VAT amount) and boxes 7 and 9 (the net amount) on Sage’s VAT return but I had expected it to be visible when I look in 2201 & 2202 Purchase Tax Control & Sales Tax Control. It seems that the T8 transactions mysteriously appear on the VAT Return correctly but without being visible in a control account.

Thanks weebly_one for your help.

 

[johndon68]

It seems that the T8 transactions mysteriously appear on the VAT Return correctly but without being visible in a control account.

Sage apply 'notional' VAT to ensure that the return shows the correct figures without there actually being any entries on the control accounts.

John

 

[David Richards]

I can now see that the transaction has appeared in boxes 2 and 4 (the VAT amount) and boxes 7 and 9 (the net amount) on Sage’s VAT return but I had expected it to be visible when I look in 2201 & 2202 Purchase Tax Control & Sales Tax Control. It seems that the T8 transactions mysteriously appear on the VAT Return correctly but without being visible in a control account.

Is the invoice for goods or services?

In your original post, you said it was a 'reverse charge' transaction - which suggests that it's for services - and so wouldn't affect box 9 on the VAT return. Box 9 is only used for acquisition of goods from an EC supplier.

Although the overall effect on the amount of VAT you pay is the same, the two types of transactions are recorded differently. So it's worth checking.

 

[Tzulie]

Is the invoice for goods or services?

In your original post, you said it was a 'reverse charge' transaction - which suggests that it's for services - and so wouldn't affect box 9 on the VAT return. Box 9 is only used for acquisition of goods from an EC supplier.

Although the overall effect on the amount of VAT you pay is the same, the two types of transactions are recorded differently. So it's worth checking.

The transaction was for a downloadable software product. As I will have service invoices to process (Google AdWords - Ireland) should I use a different tax code for services so that they don't appear in Box 9, bearing in mind I have an old version of Sage (V11)?

 

[David Richards]

The transaction was for a downloadable software product. As I will have service invoices to process (Google AdWords - Ireland) should I use a different tax code for services so that they don't appear in Box 9, bearing in mind I have an old version of Sage (V11)?

Ok, so for a supply of services where reverse charge VAT is due; the net element needs to show in boxes 6 & 7 of the VAT return. And the reverse charge VAT needs to show in boxes 1 & 4.

Hopefully Jon or one of the other Sage experts will be able to tell you how to actually achieve that in your program.