We had a really weird problem with a client's data this week. When they tried to create a new bank account they get an error message "the tax code selected is reserved for imports or exports and can't be used for bank charges." It was quite strange ...
You set up your VAT codes in Configuration ->Tax Codes and there you can use tick boxes in each code to indicate if they are to be used for import/export, and on checking tax code T2 these options were not ticked, so we could not understand the error message
However, in the Link To box, even though this is greyed out, it says this VAT code is linked to tax code T0. And on checking, the client had ticked the import /export box for Post EU withdrawal on tax code T0 and this was causing the problem.
We removed the tick in the T0 configuration and now we can create a new bank account with no problem.
So, what code should you use for imports with no VAT instead? I have been telling clients that they can use tax code T0 for invoices from suppliers importing from the EU as this puts the Net value in box 7 for purchases and does not enter any VAT into the system.
Then, when you know your postponed VAT amounts, or are charged VAT by the importing courier, you can deal with the VAT transactions later. However, if you do this you SHOULD NOT tick the import/export box or post EU withdrawal tick box as T0 needs to be available to be used by the system for UK 0% VAT transactions.
Instead, you should set up a new code that does the same as T0 in the background, but isn't used for any other reason except for import/export transactions.
When you upgrade your Sage to V27.2, Sage adds a new VAT code for Import of Goods - NO VAT - the Sage standard code for this is T14, but I have seen another system where it has been entered as T28 - it all depends on what special VAT codes your company may have used previously.
You can create your own code even if you have not upgraded to the latest version following the guidance in my screenshot. To make sure you know which code to use I have taken a screenshot of how it appears in the configuration editor so you can use the correct code going forward
"Is this making your head spin?"
If it's a little too much for you and you would like some help looking through your own Sage VAT codes to ensure you are doing the correct thing then why not arrange a hand-holding session with me, which start from 15 mins long, and you can quiz me on all your Sage VAT code queries.
Until next time ...
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more, it may be a great idea to give me a call on 01604 217365 and let's see how I can help you.
Alison loves bookkeeping and supporting bookkeepers. She has been helping clients to be better bookkeepers in Sage 50 for over 24 years and has been Xero Accredited in accounts and payroll for a number of years too.
She specialises in a very unique hand-holding method of training, helping bookkeepers and business owners to use their accounts software as and when they need support in setting up and producing their invoices, reports and financial information.
Alison combines her role at Silicon Bullet with her Forever Living network marketing businesses and is often to be seen at business networking meetings as she likes to keep busy.
You know what they say: if you want something done well ask a busy person!
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