NB: This article only applies if your company, after 1 January 2021:

  1. is located in Great Britain (i.e. excluding Northern Ireland), and

  2. imports goods from suppliers outside of the UK (i.e. the EU or the rest of the world)

Please also consult the guidance that will be issued on Sage Accounting on the correct treatment of these changes.

HMRC has new guidance about how VAT will apply to sales of goods in the UK from 1 January 2021. The only change that has been made in Sage Accounting that has required a notable change in AutoEntry is for the new "£135 consignment limit" rule that will apply to imports of goods i.e. purchase invoices.

Changes to VAT treatment of overseas goods sold to customers from 1 January 2021

A new checkbox has been added by Sage Accounting into purchase invoices for which this rule applies i.e. where

  1. the Sage Accounting company is located in Great Britain i.e. UK excluding Northern Ireland, and

  2. the supplier in question is located outside of the UK i.e. in the EU or the rest of the world (ROW)

Text in Sage Accounting:

Where the consignment value for goods is under £135.00 and you have agreed with your supplier that you will account for VAT on your VAT return using Reverse Charge.

To support this change in AutoEntry, a single VAT code has been added to our existing list of "reverse charge" (i.e. actual 0%) codes for UK-located companies:

Goods (and related services) Consignment < £135: Standard 20.00%

When an invoice is coded to this VAT code in AutoEntry, the new "Apply £135.00 consignment rules" checkbox will be ticked in the purchase invoice published to Sage Accounting automatically provided the two conditions in Sage Accounting are satisfied (i.e. the UK company is not located in Northern Ireland, and the supplier is either EU or ROW).

The published invoice in Sage then notes correctly that the supplier is EU and is dealt with under the £135 consignment rules. The total in the example below having already been converted to GBP automatically in AutoEntry:

Note that this new VAT code can still be selected in AutoEntry even where the Sage Accounting company may be located in Northern Ireland or the supplier may neither be EU or ROW - AutoEntry will not display an error or notification on publishing, but the resulting purchase invoice in Sage Accounting will correctly not have the checkbox ticked (in fact it won’t show the checkbox at all, which is the correct situation as prescribed by Sage Accounting). A warning notification in AutoEntry for such situations is planned to be available from later in January 2021.

Don't forget, if you have VAT codes set up in Sage Accounting that you do not require in AutoEntry, you can go to the Manage Lists page for that company and Hide unwanted codes. This will shorten the drop down menu of VAT codes and make it a little easier and quicker to select the required code.

This article provides general rather than specific guidance to assist all of our customers. We always do our best to make sure that the information is correct but as it's general guidance, no guarantees can be made concerning its suitability for your particular needs. The information is valid at the time of publishing and is provided without any warranty of any kind, express or implied. You should take professional advice if you require specific guidance on your individual circumstances, for example to ensure that the results obtained from using our software comply with statutory or regulatory requirements. For VAT, customs and excise and duties enquiries you should call the HM Revenue and Customs (HMRC) National Advice Service Helpline on 0300 200 3700, contact your local HMRC office or visit their website at www.hmrc.gov.uk In no event will we be liable to you for any direct, indirect, consequential or incidental loss or damage arising out of or in connection with your use of the information provided.

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