20% VAT increase
As most of you will be aware, the VAT rate is changing to 20% on 4th January 2011.
For any sales of standard-rated goods or services that you make on or after 4 January 2011 you must charge VAT at the 20 per cent rate.
If you have a cash business and calculate your VAT using the VAT fraction you must use the VAT fraction of 1/6 on your standard-rated VAT inclusive sales from 4 January 2011.
Zero rated supplies, such as basic foodstuffs, children’s clothing and books; exempt supplies, such as education and health; and supplies subject to VAT at the reduced 5 per cent rate, such as domestic fuel and power, are not affected by this change. There are no changes to the Cash Accounting or Annual Accounting Scheme.
Stay updated with 3C Accounting
As always with any change in VAT this is a worrying time for businesses. 3C will be providing a service for companies to make the necessary changes to their Sage accounts software to ensure the VAT is correct.
Alternatively for those customers who prefer to make the changes themselves, this is a great time to start thinking about SageCover which will allow you to contact Sage directly so they can talk you through the changes in the program.
For more information about how the VAT changes relate to your business you can visit the Business Link website.
Flat Rate VAT Scheme in Sage 50 2011
Sage has managed to get the software to work with the Flat Rate Scheme – fantastic. I know that may make me sound a bit geeky, but then I wouldn’t be good at configuring Sage systems for companies if I wasn’t! Once Sage is set up to work for Flat Rate (which is a tick option) then the system will allow you to perform all of the necessary returns, and nominal postings and stay compliant with HMRC.