Change is coming on September 1st and we are assisting our Exact Online clients to prepare in advance. The standard rate of VAT will be reduced from 23% to 21%, effective from 1st September 2020 to 28th February 2021. This was announced on 23rd July 2020 under the July Jobs Stimulus Package.

Recommended VAT code setup

In Exact Online we recommend preparing for the VAT rate change as follows.  Change the existing VAT rates from 23% to 21% for the various Vat codes for both Sales and Purchases. However, the timing of this is critical.

Click on Company Name – Master Data and Vat Codes

Select the appropriate 23% codes and edit to change 23% rate to 21% and Save.

In order to do this, you will need to ensure the following:

 

Sales

Only change the Sales Vat code to 21% when all the August Sales invoicing is complete.

Any Sales Orders in the system which are not yet invoiced by 31^st August will need the Vat Codes to be reselected on every line to pick up the 21% rate before being invoiced from 1^st September onwards. The original sales vat of 23% will be on the Sales Order despite the Vat Rate having been changed until you reselect the Vat Code to pick up the new rate on each line.

Purchases

Only change the 23% Purchase Vat codes to 21% when the bulk of the Supplier Invoices for August have been processed.

You will still need to add in one new Vat Rate 23% Purchases for any late Purchase Invoices which tends to happen. Eg 18

This is done in 2 Steps – complete the data on the Left-hand side and Save and then Add the Vat Links (4 and 7 for purchases)

For Purchase Orders not yet Invoiced, you will have to reselect the Vat Code (21%) for those invoiced after 1^st September on every line of the PO.

For any late Purchase Invoices dated prior to September, you can use the newly created (eg code 18) 23% rate to record these.

 

EU VAT Rates

Any EU vat rates that are computed @ 23% will have to be edited to compute @ 21%

RTD Return

at year end – separate reports may have to be run for the period up to End of August and from September onwards to obtain the correct figures for the RTD return.

Default Vat Codes

Customers, Suppliers and Products will continue to point at the original Vat Code which has now changed from 23% to 21% so no change required here.

Further Discussion

If you would like to discuss further the VAT rate change and Exact Online, please call James Doyle on (071) 9146815 or email jdoyle@synergynet.ie