To access the screen to make these changes:

1. From the Welcome screen, click on Set up books on the menu bar.
2. Click on the Set up VAT codes option.

You will then see this screen:

This is a single screen that shows the VAT rates that you can change if legislation is altered. The old rates are on the left and in the middle, the current rates are on the right. The start date at the top of the column defines when the changes were made, and the system will then apply the correct rates to items either side of the date of change.

Enter the date of the latest VAT rate change and alter the rates accordingly:

Rate 1, 2, 3 and 4 can be used for alternative rates, so that when entering data, instead of choosing rate S to calculate the standard VAT rate, you can use rates 1, 2, 3 or 4 to calculate a different rate. An example of this would be rate 1 being 5% for some fuels or building rates within the construction industry.

Cash based VAT Y/N

The other part of the VAT setup involves deciding if you are running cash-based VAT or not.

Under the cash accounting scheme, you only account for and pay VAT to the VAT office when your customer pays you, and when you pay your suppliers. This means that if you don’t get paid by your customers, you don’t have to pay the VAT office the VAT, although scheme users can’t reclaim VAT on purchases until they pay their suppliers. It is ideal if your customers take a long time to pay you, and can help your cashflow.

Your accountant can advise you further on this decision, and the system will also allow you to make the change during the year, so long as you put the date of change either from or to cash accounting. The reporting will do the rest.

Important

This change should only be made at the start of a VAT period, and done before entering any transactions for that period.

If you are using the cash accounting scheme, as you pay off invoices through the Payments and Receipts cashbooks you will see the VAT totals recorded in a separate box just below the page total VAT.

If you are unsure about any of the VAT settings and how they affect your cashflow and reporting to the VAT office, then please do not hesitate to contact us.