A2X sends settlement transactions to Sage as sales invoices or purchase invoices depending on whether the settlement is positive or negative, this is to ensure the reconciliation process is as straightforward as possible.
We have found that Sage’s VAT return calculates VAT on Sales and Purchases based on document type (i.e. Invoices and Bills) rather than by tax rate. We recommend discussing the implications of this with your tax advisor because whilst the net VAT reported by Sage will be correct, the VAT on Sales and Purchases may be skewed by some of the fees being included in the VAT on Sales and vice versa.
For example if you have a negative settlement period and A2X sends across a bill for the following:
Because it is a bill, the VAT on sales will actually appear in Box 4 of the VAT return. Although it will still be the correct value it will appear in the wrong box.
If your tax advisor recommends amending the figures shown in the VAT Return to ensure the VAT is split into the relevant sales/purchases boxes correctly we have identified two options;
Create a worksheet that will calculate the adjustments required to the VAT Return and use this to manually amend the VAT Return using the ‘adjust’ function within the VAT Report on Sage.
An example of this worksheet is below.
Within your accounts and taxes mapping, set the tax rates to ‘No VAT’ for all transactions within A2X and use the Tax Transactions section to map to ‘tax suspense’ accounts in Sage which you can then use to manually recode the balance to the correct VAT account at the end of the VAT period prior to filing the VAT Return. This option is not available for Etsy and eBay accounts as you will not have any GB VAT separated out in the Tax Category of the mapping page.
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