axis diplomat 2008 Accounts Support Notes

As indicated in Application Support Note 23237544 (1st January 2010 - UK VAT Rate Changes), the increase in standard VAT rate from 15.00% to 17.50% on 1st January 2010 may result in you needing to consult the guidance supplied by HMRC to assist you with determining the correct rate of VAT to apply to orders received prior to 1st January 2010.

Examples of this would typically include pre-paid sales orders which can not be shipped until after 31st December 2009 and orders for which a total price including VAT has been agreed at 15.00% but due to shipment and payment timing will now need to be inclusive of VAT at 17.50%. Typically, affected axis diplomat users would include those with retail websites and mail order transactions. Normal Business-to-Business supplies are unlikely to be affected and only the changes in Application Support Note 23237544 need be applied.

http://www.hmrc.gov.uk/vat/forms-rates/rates/rate-changes.htm

For users of axis diplomat versions 2006 and above, we have made some enhancements to the software to assist you with applying the appropriate VAT rates to your sales orders. These changes include providing:

1. The ability to 'freeze' the VAT rate at 15.00% on a sales order.
2. The ability to re-calculate the net order value on an order that was at 15.00% VAT so that when the order is changed to 17.50% the gross does not increase. Please note that Diplomat systems running with VAT inclusive Stock Ledger pricing will not need to make any changes using this functionality as the system will handle this automatically.

These actions will need to be applied on an order-by-order basis and we strongly recommend that you consult the HMRC documentation (see link above) prior to over-riding the VAT rate on any sales orders.

The Update for axis diplomat 2006 and axis diplomat 2008 can be downloaded by clicking here.

The interface for these changes has been provided as a right-click option from the Sales Orders tab of the Sales Order Monitor.

1. 'Freezing' The VAT Rate

If, having consulted the HMRC guidelines, you need to retain the 15% VAT rate against a sales order, right-click on the selected sales order from the Sales Orders tab of Sales Order Monitor and select the 'Adjust For VAT Changes' option.

If you are running this function whilst your Sales Groups still indicate a VAT rate of 15.00% (typically, prior to 1st January 2010) then  both the Current VAT code and the Required VAT code prompts should be set to your 15.00% VAT codes, as shown above.

If you are running this function after your Sales Groups have been amended to the 17.50% VAT rate, and you need to revert this sales order back to 15.00%, then the Current VAT code prompt should be set to the 17.50% VAT code and the Required VAT code should be set to the 15.00% VAT code.

Finally, if you have a Sales Order that you know will be invoiced at the 17.50% VAT rate but need to produce a Pro Forma whilst the Sales Groups still indicate 15.00% then you can freeze the sales order to the 17.50% VAT rate by setting the Current VAT code to 15.00% and the Required VAT code to the 17.50% VAT code.

2. Re-calculation of Net and VAT Values From The Gross Order Value

On orders for items that are not flagged on your Stock Ledger for VAT inclusive pricing, you may need to retain the overall gross order value from prior to the VAT rate change.

For example, you may have a deferred payment credit card authorisation for £9.99 against an order and therefore need to ensure that you still invoice this amount. However, although the order was originally entered with a rate of 15.00%, HMRC indicate that the order needs to be supplied at 17.50% VAT.

To re-calculate the gross order value as inclusive of 17.50% VAT, select the right-click 'Adjust for VAT Change' option from the Sales Order Monitor and ensure that the Adjustment Parameters are as per the screen shot below:

In this instance, the Current VAT code should be set to the VAT code that originally applied to the order - in other words, when selecting Recalculate VAT as the adjustment, the Current VAT code should normally be set to your 15.00% code, as shown above.

You are advised to check any orders adjusted using this method as there may be rounding differences which may require manual adjustment.