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With the change in the VAT rate from
17.5% to 15% happening on Monday 1st December, we thought that you
might appreciate some tips on how to survive the change.
1. Clear down or reduce the orders in
your Sales Order batch
After the 1st December the most challenging task will be dealing
with orders that were created when the VAT rate was 17.5%, but will
need to be invoiced in December at the new rate of 15%. There is an
operational advantage in invoicing as much as you can by the end of
this month. This will reduce the amount of manual intervention that
you will need to make after 1st December. Please note that any
deliveries made before 18th November must be invoiced at 17.5% in
order to meet HMRC’s regulatory requirements.
2. Encourage your suppliers to
invoice you now
Posting all your 17.5% VAT invoices before you change the default
rate will reduce the likelihood of posting errors after 1st
December. It will also make it easier for you to match the gross
values of your purchase orders to invoices whilst posting.
3. Get up-to-date with your Ledger
postings
In order to reduce the complexity after 1st December, ensure that
you are up to date with all your ledger postings for the end of the
month.
4. Print off all documents before 1st
December
Ensure that you have printed off (or emailed) all Invoices and
Credit notes that feature 17.5% before you make the VAT rate change.
This will ensure that they accurately display the correct VAT rate
percentage for the period.
5. Backup your data before
implementing the change
Take a backup of your data and retain this, prior to implementing
the VAT change on 1st December. From the 1st December, your accounts
data will always refer to VAT Code 1 as being 15%. Having a backup
will provide additional assurance for audit enquiries if required.
6. Integrated Systems
If you have other 3rd party applications that post data into your
accounts software you will need to test these to ensure that these
apply the correct VAT treatment. If they update your Access software
on a “batch” basis make sure that all the November batches have been
posted into your accounts system before changing the VAT rate. Some
3rd party systems have had the 17.5% VAT rates “hard-coded” into the
application and may need a program update.
7. 24/7 Web Shops
If you do business via a 24/7 web shop presence that “feeds” the
accounts system with orders and collects payment at the same time,
you will need to be aware that the VAT rate changes at midnight on
Sunday. It is likely that you will need to update the accounts
system with all the 17.5% orders as a separate distinct update from
transactions being posted after midnight.
8. Spreadsheet Models
Check the spreadsheet models that you use in your financial planning
and budgeting. The change in VAT will have an impact on your cash
flow and tax liabilities and you may need to update your worksheet
models.
9. Estimates, Quotes, Orders and
Proformas
When processing these transactions after 1st December you will need
to review the VAT values brought forward. You will need to reselect
the VAT Code again (which will now display 15%), this will
recalculate the VAT values to the new rate of VAT
10. Recurring VAT Journals
If you post regular VAT’able purchases using recurring journals
please bear in mind that you will need to review these after 1st
December. You will need to re-select the VAT code in order to
recalculate the VAT values.
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