How the SPLedger VAT and Tax Options Work

	We have done what we can to ensure that we have added as much Brexit support, however it is important that you review your own needs and business requirements.

The SPLedger has been updated with two new options:

• Less than £135: If the total value of your whole consignment is under £135 net, then this option should be ticked. The £135 net is the total value of the whole consignment, not just for the invoice that is being posted. The £135 net threshold is not detectable by Khaos Control, so it's up to you to ensure this is accurate and applicable before posting.
• EU Import into NI: If you are trading from NI and importing goods from the EU, this option should be ticked. The VAT is accounted for in the same way as it was before Brexit.
  

Two existing options can also be used post-Brexit where appropriate:

• EC/RC Tax: This option is only intended to be used when processing Purchase Ledgers and will add an entry into the UK VAT Return that will cancel out the VAT amounts by adding the same tax value as a credit and debit, for example when creating a credit note for an EC supplier.
• Service RC: This is used to record VAT on services received from overseas suppliers as this can be considered as a reverse charge. It will appear on the UK VAT Return as two entries for the same amount; one for a sales invoice and the other for a purchase invoice. Examples are if you use overseas shipping agents, legal services or translation services.
  Note: For both EC/RC Tax and RC Tax we recommend that you take advice/guidance from HMRC to make sure this is applicable to your situation.

Notes:

• Postponed VAT Accounting (PVA) see HMRC - Check when you can account for import VAT on your VAT Return from 1 January 2021.
• PVA is applicable to UK suppliers, but the PVA information text is not displayed for these suppliers.
• EC/RC tax is only intended to be used when processing Purchase Ledgers.
• The £135 Net threshold is not detectable by Khaos Control, so it's up to the user to ensure this is accurate and applicable before posting, see HMRC - VAT and overseas goods sold directly to customers in Great Britain from 1 January 2021.

Scenarios

The following scenarios explain what happens when recording/posting purchase invoices in the SPLedger.

	Khaos Control cannot validate what is entered, so please ensure you use the appropriate scenario for your business situation.

Service Reverse Charges

These apply as they did before Brexit:

1. UK supplier - with VAT (normal, unchanged)
2. UK supplier - without VAT (normal, unchanged)

Consignment Over £135 Net - posting Import VAT as PVA

UK supplier

1. Tax Rate = Exempt
2. Set NET amount as needed
3. Fill in EC/RC VAT with Import VAT amount.
   Note: the warning about PVA is missing for this scenario as it was unexpected.

EC Supplier

1. Tax Rate = Exempt
2. Set NET amount as needed
3. Fill in EC/RC Vat with Import VAT amount if applicable.
4. Warning/Confirmation of the PVA VAT amount will be displayed.

ROW Supplier

1. Tax Rate = Exempt
2. Set NET amount as needed
3. Fill in EC/RC Vat with Import VAT amount.
4. Warning/Confirmation of the PVA VAT amount will be displayed.

Consignment under £135 Net - posting reverse charge VAT

UK Supplier

1. Tax Rate = Exempt
2. Tick the "less than £135" checkbox
3. Set the NET amount as normal
4. Fill in EC/RC VAT with the RC VAT if applicable.
5. A warning will not be displayed.

EC Supplier

1. Tax Rate = Exempt
2. Tick the "less than £135" checkbox
3. Set the NET amount as normal
4. Fill in EC/RC VAT with the RC VAT if applicable.
5. A warning / confirmation will be displayed.

ROW Supplier

1. Tax Rate = Exempt
2. Tick the "less than £135" checkbox
3. Set the NET amount as normal
4. Fill in EC/RC VAT with the RC VAT if applicable.
5. A warning / confirmation will be displayed.

Recording/Posting an Invoice for Services

EC/ROW Supplier

1. Tax Rate = Exempt
2. Set the NET amount as normal
3. Fill out the EC/RC tax with the appropriate amount of VAT which will be used as part of the reverse charge.
4. Tick the "Service RC" box to indicate that's how you want it processed.
5. Two postings to the tax return will result, which cancel each other out.
6. Confirmation will be displayed.

Processing Imports into NI

(NI) EC Supplier

1. Must tick the "EU Import from NI" this will tick by default if the system values option is enabled and the supplier is from and the supplier is from an EC country.
2. Postings will be as any EC purchase ledger would have been before Brexit.

See Also

• Accounts overview