Outside VAT Scope

Table Of Contents

Overview
Create an Outside VAT Scope Tax Rate
Open Tax Rates
Unhide the Outside VAT Scope Column
Create the Tax Rate
Result
Unhide the Column
Unhide the Column
SP Ledger Entries
Notes

Important: This functionality must be enabled before it can be used. Although it forms part of the Accounts module, there are no additional charges for enabling it.
To enable the feature, please email Development.

Overview

The Outside VAT Scope feature allows transactions to be excluded from VAT reporting while still being recorded within the accounts system.
Transactions marked as Outside VAT Scope:
  • Continue to post to the accounting ledgers.
  • Do not appear on the VAT Return.
  • Can be used on both sales and purchase transactions.
The following areas of Khaos Control support Outside VAT Scope processing:

Important Restrictions

Before enabling this feature, be aware of the following limitations:
  • Opening Balance tax postings are not supported.
  • Outside VAT Scope only works with a zero-rated tax rate.
  • Create Allocation Transaction (used for underpayments and overpayments) is not compatible with Outside VAT Scope processing.
For information on underpayments and overpayments, see:
How To: Create an Under / Over Payment

Configuration

Before transactions can be marked as Outside VAT Scope, you must create an appropriate tax rate.

Create an Outside VAT Scope Tax Rate

Open Tax Rates

  1. Open a System Data screen (show me how).
  2. Open [ Accounts | Tax Rates ]

Unhide the Outside VAT Scope Column

If the column is not visible:
  1. Open the grid menu.
  2. Select Configure Grid.
  3. Use Edit Profile For to choose:
    • Current User, or
    • A User Profile.
  4. Highlight the Outside VAT Scope column.
  5. Untick Hide Column.
  6. Click OK.

Create the Tax Rate

  1. Press Alt+E or click Edit.
  2. Press F3 or click Add.
  3. Enter:
    • A tax code.
    • A description such as Outside VAT Scope
    • A tax rate of:0%
  4. Tick Outside VAT Scope.
    Note: The checkbox can only be selected when the tax rate is zero.
  5. Press Ctrl+S or click Save.

Configure Stock Items

Stock items that should always be treated as Outside VAT Scope can be configured individually.
  1. Open a Stock screen (show me how).
  2. Open the Accounting tab.
  3. Press Alt+E or click Edit.
  4. In Base Tax Rate, select your new Outside VAT Scope tax rate.
  5. Press Ctrl+S or click Save.

Result

Any future sales or purchase transactions using that stock item will automatically use the Outside VAT Scope tax rate.

Display the Outside VAT Scope Column on Sales Orders

The Outside VAT Scope column is available on Sales Orders but is hidden by default.
Note: This column is read-only.

Unhide the Column

  1. Open a Sales Order screen (show me how).
  2. Open the [ Sales Orders | Main ] tab.
  3. Open the grid menu.
  4. Select Configure Grid.
  5. Use Edit Profile For to choose:
    • Current User, or
    • A User Profile.
  6. Highlight the Outside VAT Scope column.
  7. Untick Hide Column.
  8. Click OK.
  9. Close and reopen the Sales Order.

Display the Outside VAT Scope Column on Purchase Invoices

The Outside VAT Scope column is also available on Purchase Invoices and is hidden by default.
Note: This column is read-only.

Unhide the Column

  1. Open a Purchase Invoice screen (show me how).
  2. Open the grid menu.
  3. Select Configure Grid.
  4. Use Edit Profile For to choose:
    • Current User, or
    • A User Profile.
  5. Highlight the Outside VAT Scope column.
  6. Untick Hide Column.
  7. Click OK.
  8. Close and reopen the Purchase Invoice.

Using Outside VAT Scope

SP Ledger Entries

A new Outside VAT Scope column is available within the SP Ledger.
When an Outside VAT Scope tax rate is selected:
  • The checkbox is automatically ticked.
  • Transactions are posted to the accounts.
  • Transactions are excluded from VAT reporting.

Notes

  • If a posting contains any VAT, the Outside VAT Scope option cannot be selected.
  • Outside VAT Scope is not supported on multi-line SP Ledger entries.

Sales Orders

When a Sales Order contains a stock item that uses an Outside VAT Scope tax rate:
  • The Tax Rate column shows the Out of Scope tax rate.
  • The item is invoiced as normal.
  • The transaction is excluded from the VAT Return.
Note: Sales Orders can contain a mixture of:
  • VATable items
  • Outside VAT Scope items
The system will process each line appropriately.

Purchase Invoices

When a Purchase Invoice is posted:
  • Any lines marked as Outside VAT Scope are excluded from the VAT Return.
  • The accounting postings are still created normally.
Note: Purchase Orders and Purchase Invoices can contain a mixture of:
  • VATable items
  • Outside VAT Scope items
Each line is processed independently for VAT reporting purposes.

Summary

Outside VAT Scope functionality allows businesses to:
  • Record transactions in the accounts module.
  • Exclude specific transactions from VAT reporting.
  • Apply Out of Scope processing to stock items, sales transactions, purchase invoices and SP Ledger entries.
To use the feature successfully:
  1. Enable the functionality.
  2. Create an Outside VAT Scope tax rate with a 0% value.
  3. Configure stock items where required.
  4. Use the appropriate tax rate on transactions.
  5. Review the Outside VAT Scope indicators on Sales Orders, Purchase Invoices and SP Ledger entries.
This ensures accounting information remains complete while VAT Returns include only the transactions that should be reported.


See Also

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