Set Up – V.A.T.

V.A.T. Reporting Periods

At the same time as setting your Nominal Ledger periods you can also set your V.A.T. reporting periods.

If your business is registered for V.A.T. it will typically have to submit a V.A.T. report once every three months according to requirements set by the tax authorities.

This frequency will not necessarily coincide with your business Trading Year periods.

Click menu View > Parameters > Nominal & Cash Book and enter details in VAT and Nominal Page. For example, if your accounting year-end is July (i.e. August is period 1) and your V.A.T. reporting periods are September (i.e. period 2), December (i.e. period 5), March (i.e. period 8), June (i.e. period 11), you should enter 2, 5, 8, 11 in the first four periods in the VAT period ends boxes.

You might need to think about this, but it is worth it as the software can then maintain and report your V.A.T. liabilities for you and remind you when your V.A.T. returns are due.

If your business is not registered for V.A.T., you should leave these fields blank. See also Not Registered for V.A.T.

V.A.T. Rates, Default V.A.T. Codes and V.A.T. Schemes

Your Prelude Desktop product allows you to maintain a number of different V.A.T. rates. These are used in processing Daybook
Transactions and each is identified by a unique 1 character code.

Click menu View > Parameters > General and enter details in VAT and Nominal Page.

Scroll up and down as required and add/amend rates by overtyping. The system will read input as percentages (i.e. 20 entered = 20.0%),
Apart from code N for “Not Applicable” all these rates can be changed to suit your preference.

You can maintain up to 36 different V.A.T. codes and rates (identified as codes 0-9, A-Z).

In practice, many businesses will require at most six V.A.T. codes if they only trade within the UK. Otherwise you may require a couple more. Here is an example – Your Prelude Desktop product allows you to choose whichever codes you wish with the exception of E, N, R, S, and T. Any EC codes must be checked.
Code 0 – for zero-rated supplies and Exports/Imports outside the EC.
Code 1 – for standard-rated supplies (This is set as the default V.A.T. Code when first installed – see below to change this)
Code E – is reserved for Exempt supplies such as insurance and intercompany transactions
Code 4 – for Sales to EC Countries.
Code 5 – for reduced-rate V.A.T. supplies – certain fuels and medical products.
Code 7 – for Purchases from EC Countries.
Code N – is reserved for supplies where V.A.T. is not applicable. These are supplies that are outside the scope of V.A.T. – e.g. if your business is not V.A.T. registered – see below. Codes R, S and T – are reserved for Reverse Charge transactions.

If your business leases cars you may wish to create a code for Restricted V.A.T. at half the V.A.T. rate – e.g. VAT Code L

More codes may be needed by businesses that deal in specially-rated products and services.

You should also select the appropriate V.A.T Scheme for your business. See Invoice or Cash Accounting for V.A.T. to help you decide and click the relevant V.A.T. Scheme button.

Daybook transactions require you to input a V.A.T. code for each entry and each of the Daybooks can be set with a default V.A.T. code. For each of the Daybooks the standard is set to V.A.T. code 1 but you may change these as follows:

Sales Daybook: Click View > Parameters > Sales and enter your chosen default V.A.T. code in the Sales Ledger Page.

Purchase Daybook: Click View > Parameters > Purchase and enter your chosen default V.A.T. code in the Purchase Ledger Page.

Cashbook: Click View > Parameters > Nominal & Cash Book and enter your chosen default V.A.T. code in the VAT
and Nominal Page.

See the FAQ’s VAT section for how to configure the software for different V.A.T. schemes and if your business is not registered for V.A.T. Also see the section – Making Tax Digital For VAT.