Manage VAT rates

Find this screen

Open: Settings > Organisational and Financial > VAT Rates.

How to

Create a VAT rate

Open: Settings > Organisational and Financial > VAT Rates.

To create a VAT rate:

  1. Click Add to add a new row on the table.

  2. Enter a unique code and name.

    This name appears throughout Sage 200cloud, so make sure that the name adequately describes your new VAT rate.

  3. Select the VAT Return box if you want to include the value of VAT accumulated under this code in the VAT Return.

    Note: If you don't select this and post vatable transactions to this code, the results are included in the Non-Trading Vatable Transactions report. This report is produced with the VAT Return, but can also be produced as a separate report.

  4. Specify how this tax rate is to be treated for processing. Select the appropriate option from the Terms list.

  5. Enter the VAT rate %. (0 to 999.99).

  6. Select nominal accounts for the Input Code and Output Code, if you don't want to use the defaults. The values for this rate are accumulated in this nominal account.

    If you do not enter accounts here, they will use the default nominal accounts you have set for Default VAT Input and Default VAT Output.

    If you enter the same nominal account number for both Input Code and Output Code and your company is registered for VAT, the balance of the nominal account will reflect the outstanding net VAT.

Amend a VAT rate

You can change any of the information about the VAT code.

Any changes made will only affect subsequent transactions.

Note: Remember, changes to the VAT rate % will affect your VAT Return.

Useful info

About the nominal accounts used for VAT

Sage 200cloud uses two nominal accounts to record your VAT:

  • VAT Input - for the VAT on your purchases.
  • VAT Output - for the VAT on your sales.

Any VAT entered on a transaction is automatically posted to these nominal accounts. You specify which nominal accounts to use for these on the Default Nominal Accounts screen.

You may also want to have an additional nominal account to records payments made to HMRC.

As long as all your VAT nominal accounts have the same report category, you net VAT liability will be report on your Balance Sheet, so there's no need to journal between accounts.

If you only want to use a single nominal account for your VAT, then you can enter the same nominal account for both VAT Input and VAT Output.

Default VAT rates

We have set up a number of VAT rates for you:

UK or EU Code Name When to use this



0 Exempt Exempt from VAT. Set at 0%.
1 Standard Rate VAT at the standard rate (20%).
2 Zero Rated Vatable, but zero rated at 0%.



EU only

4 EC Sales Goods & Services Sales of zero-rated goods and services to the EU.
5 EC Sales Services Sales of non-related services to EU.
6 EC Purchase Services Purchase of non-related services from the EU.
7 EC Zero Purchases Purchase of zero rated goods and related services from the EU.
8 EC Standard Purchase Purchase of Vatable goods and related services from the EU.


We advise that you do not amend the general details of these tax rates. The only fields you should update on these rates are:

  • %
  • Input Acc. No
  • Output Acc. No

If you need other VAT rates create new ones.

For examples of VAT rates, and to determine which rates to use, see:

When to create a new VAT rate

You may find that you need additional VAT rates to the defaults we've supplied.

Depending on what you but and sell you may need to create a VAT rate for reduced rate items and non-vatable items.

Reverse charge VAT

Reverse charge VAT is a term that covers the following scenarios:

  • Accounting for VAT as a reverse charge on goods and services supplied to a UK or Irishbusiness from an EC business.

  • Accounting for VAT as a domestic reverse charge to prevent fraud in trade between businesses within the UK centres involving goods originating from the EC. This is known as carousel fraud or missing trader intra community (MTIC) fraud.

You set up VAT rates differently for each of these scenarios.

For more information on each type of reverse charge VAT, see:

Applying Term codes to your VAT rates

VAT rates have a Terms setting which controls how the rate is treated for processing.

You should select the appropriate term according to your business:


UK or Ireland

For more information, see Trading in EC countries.

Domestic reverse charge VAT rates for preventing carousel fraud in the UK

This information describes how you set up rates to apply reverse charge VAT to prevent carousel fraud in the UK. See HMRC: Domestic reverse charge procedure (VAT Notice 735).

When you are trading in specified electronic devices (such as mobile telephones and computer chips) in the UK with another UK business and the value of your trade exceeds £5000 for a UK VAT registered customer, you should set up VAT rates to prevent carousel fraud. These VAT rates have not been set up for you.

To set up reverse charge VAT for carousel fraud:

  • Create two VAT rates, with Terms set to Reverse charge sales (Mobiles) and Reverse charge purchases (Mobiles).



    VAT Return



    Enter a unique code. Enter a unique name. Select the VAT Return box. Select Reverse charge sales (Mobiles).

    Enter your local VAT rate.

    Enter a unique code. Enter a unique name. Select the VAT Return box. Select Reverse charge purchases (Mobiles).

    Enter 0 (zero) %.

    • Specify Input Code and Output Code nominal accounts, if you want to override the Default VAT Input and Default VAT Output tax nominal accounts in the company's default nominal accounts.

    The VAT rates are used for accumulating values for the EC sales or purchase boxes on the VAT Return for transactions between EC member states. Sage 200cloud uses default codes 4, 5, 6, 7 and 8 for these rates.

  • Ensure that appropriate product groups in Stock Control have Use reverse charge VAT rules enabled. These product groups should be used for all stock items that fall under the reverse charge VAT rules for preventing carousel fraud.
  • For each relevant stock item, enable Use reverse charge VAT rules on the stock item Analysis tab.
  • Open Invoice and Order settings, go the Invoice Printing tab, then select Apply reverse charge VAT rules when printing invoice.

Reverse charge VAT rates for the CIS

The reverse charge VAT rates for CIS are not applicable for use with Sage 200cloud Standard.

  • Do not use the VAT rate Terms for CIS Reverse charge sales and CIS Reverse charge purchases.

Notional VAT effects on order and invoice totals

Notional VAT is tax that should be declared on invoices, but is not payable, nor can be claimed back.

When you use notional VAT rates on orders and invoices, this will affect the VAT, Gross, and order/invoice Total as follows: