Our latest in the series providing useful hints and tips on how to use Sage 50 accounting software more effectively, this month Sage 50 EC Sales
With technology available today even the smallest business can reach customers throughout the world. Many will have customers in other EU member states. It’s important that trade in the EU is correctly reported. The statistics gathered are used in calculating our balance of payments. Configuring and applying Sage 50 tax codes (VAT codes) correctly will make such reporting more accurate and less onerous.
VAT codes have been a separate subject in the past. They can be amended or activated in the Sage 50 configuration editor.
Ensure you apply the correct codes in order to track sales and purchases of goods and services to other EU member states separately.
Tip: use separate ‘goods’ and ‘services’.
This is the method of collecting information and providing statistics on the movement of goods between the UK and other EU member states.
On the VAT return the cost of goods should be included in box 8 for sales (exports); and box 9 for purchases (imports).
Cost of goods excludes any related costs that are not part of the contract price for the goods, ie commissions.
For most businesses the details on the VAT return will be sufficient. However if you export more than £250,000 or import more than £1.5m you will need to complete additional monthly declarations or SDs (Intrastat Supplementary Declarations).
EC sales list (ESL)
This is the method of collecting details of the supply of goods or services from VAT registered businesses in the UK to VAT registered customers in other EU member states.
You will need to complete an ESL if during the period any of the following apply:
- There is a value in box 8 on your VAT return (HMRC will automatically issue an ESL for completion);
- Supplied goods to a VAT registered business in another EU member state that are not included in box 8 on a VAT return, such as free of charge (unless they qualify as samples);
- Moved your own goods to a VAT registered branch, office, or subsidiary company that you own in another EU member state;
- Gave a VAT registered customer in another EU member state a credit note for goods even if you did not supply any goods in this period;
- Sold goods to a VAT registered customer in another EU member state. You arranged for your supplier, located in an EU member state, to send those goods directly to your customer (this is triangulation);
- Supplied services to a VAT registered business in another EU member state and that business will account for the VAT (this is the reverse charge).
Sage 50 includes an ESL report. In order for this to work you will need to maintain the following information in customer records:
Customer’s VAT registration number
Tip: sales to non VAT registered customers in other EU member states are normally charged at standard UK rate and not included on ESL.
Tip: be careful to track total sales for each country in case you trigger the local VAT registration threshold.
Have you read our Sage hints and tips for tax and VAT codes?