Caletech - UK Vat Rate Change

On 24th November 2008 the UK Government announced that the standard rate of VAT would be reduced from 17.5% to 15%. This change comes into effect on Monday 1st December 2008 and will run for 13 months.

Access have produced PDF factsheets for Dimensions/Dimensions Lite and Horizons/Foundations XP users which include detailed guidance on how to implement the VAT rate change, and how to deal with transactions that span the VAT rate change date.

The factsheet for each Access product can be downloaded below. Please right click on the link and choose to save to your hard drive for reference.

Factsheet for Dimensions and Dimensions Lite

Factsheet for Horizons and Foundations XP

Top 10 tips for getting through the VAT rate change

Summary:

You should update your standard 17.5% VAT rates to the new 15% rate before you commence trading on 1st December
The VAT code(s) to change, assuming you are using the default rates set up within the Access range of software will be VAT code 1, and also if you trade with the EC then rates A, R, V and U should also be changed to 15%
A new VAT rate should also be created to cater for transactions posted after 1st December, but which still requires the old 17.5% rate (e.g. late November supplier invoices)

Batched Sales and Purchase Orders

Special attention will need to be given to existing batched Sales and Purchase Orders as of the changeover date.
These will still retain VAT calculations at the old 17.5% rate, and will have to be edited by changing the VAT code on each line from 1 to 0 and back to 1 again in order to recalculate the correct VAT amount
Part-processed batched Sales and Purchase Orders will prevent such changes, so detail lines on such orders will have to be closed and the balance carried to a new line in order to facilitate a recalculation of the VAT value

Recurring VAT Journals

Existing recurring VAT Journals will need to be edited to recalculate the VAT value by changing the VAT code on each detail line from 1 to 0 and back to 1 again

Duplicating Orders

We recommend that users do not use the duplication feature for the moment. Any Sales or Purchase Orders dated prior to 1st December 2008 will be duplicated with the original VAT values calculated at 17.5%

Copy Invoices/Credit Notes

These read the current rate descriptions when printing, so the standard document layouts will print 15% even for invoices/credit notes produced prior to 1st December 2008. The actual VAT values will however be correct as calculated at the original tax point date at 17.5%
If you produce a lot of copy invoices you may wish to consider leaving the existing standard VAT rate at 17.5% and using a new VAT code for 15% transactions, although this will also involve having to change the default VAT rate on your sales and purchase analysis codes