axis diplomat 2008 Accounts Support Notes

On 24th of November 2008, the government announced a change in the standard rate of VAT from 17.50% to 15.00%, with effect from the 1st December 2008. This change has been announced as a temporary change, lasting 13 months until the end of 2009.

The following instructions tell you how to update your axis diplomat system to handle the new VAT rate.

These instructions apply to all versions of axis diplomat.

1. Ensure that all Sales Orders for goods supplied up to and including 30.11.08 have been released. If this is not possible, please see the footnote on Deferred Invoicing at the bottom of this support note.
   
   
2. For systems using Goods on Account (i.e. deferred or consolidated invoicing), it is not absolutely essential that all bookings have been invoiced but it is much simpler if you can achieve this. For further information, see the footnote on Deferred Invoicing at the bottom of this support note.
   
   
3. Use the function Maintain VAT Rates, on the Nominal Ledger section of the Supervisor Functions to define a new VAT code at 15.00%. DO NOT amend the percentage of your existing 17.50% VAT code.
   
   
   
   
   
   
   
   
4. Use the function Amend Sales Groups within the Maintain Sales Groups section of the Sales Ledger Supervisor Functions to amend each active Sales Group that is assigned to the existing 17.50 VAT rate to refer to the new 15.00% VAT rate instead.
   
   
   
   We have produced an update for axis diplomat 2008 and axis diplomat 2006 customers with Software Assurance that will allow you to block update all of your Sales Groups at once. If you have a large number of Sales Groups to amend then you should consider downloading this patch from this web site. Click here to download the Sales Group Block Amendment function.
   
   
5. If you also have an axis vMerchant eCommerce web site, remember that your web site will continue to charge VAT at 17.50% until such time as you republish these changes. Please see the footnote regarding eCommerce web sites for further information.
   
   
6. When booking Supplier's Purchase Invoices, you must always use the VAT as calculated by your supplier. If the supplier has charged 17.50% VAT then book the invoice against the existing VAT code. If the supplier has charged 15.00% then book against the new VAT code.
   
   

Additional Notes

Customers with eCommerce Web Sites

If

• you have an eCommerce web site that accepts orders by credit cards
  and
• you take payment up front rather than deferred
  and
• you will not be despatching orders over the weekend

then you should consider updating your sales groups and re-publishing data to your web site at the close of business on the last working day of November rather than at the start of business on the 1st December. Orders taken over the weekend but not despatched or invoiced until December will be invoiced at 15% and not 17.50%.

If your web site is still calculating order values at 17.50% over the weekend then you will in effect be over-charging the customer's credit card in comparison to the value of the subsequent invoice.

For further information, please consult the HMRC document on sales that span the 1st December (link at bottom of document). 

Deferred/Late Invoicing and Deposit Invoicing

This footnote is relevant if you

• use Goods on Account to defer invoicing (i.e. the date of the invoice does not correspond to the date of the supply of the goods or services) or
• are not able to invoice sales orders fulfilled in November before the start of December

If either of these apply then you should consult the HMRC guidelines for further information (see links below).

axis diplomat fixes the VAT rate at the point a Sales Order is released since this is the point you are telling the system that the goods or services have been supplied, and in most circumstances, this corresponds to the tax point. Different situations may arise, depending on whether you are releasing the Sales Order to Goods on Account or releasing the Sales Order to Invoice:

Releasing Sales Orders to Goods on Account

axis diplomat will have recorded the VAT against each Goods on Account booking line at the time they were created. This means that (if you follow the guidelines above), for sales orders released to Goods on Account before the 1st December the resultant invoice will include VAT at 17.50% regardless of when the invoice is generated. The HMRC guidelines state, however, that if the invoice is generated within fourteen days of the supply of the goods then the invoice date becomes the tax point.

This could mean that (depending on timing) if you invoice your Goods on Account bookings between 1st December and 14th December for goods or services supplied during the last two weeks of November then you could possibly need to charge VAT at 15% rather than 17.50%. If more than fourteen days elapse between the supply of the goods or services and the generation of the invoice then the tax point remains as the date of the supply of the goods or services and in this scenario the VAT rate would remain as 17.50%.

You should therefore ensure that you have either invoiced all of your Goods on Account Booking at the end of November or that you ensure that more than fourteen days has elapsed between the November supply of goods or services and the raising of a corresponding December invoice.

Releasing Sales Orders to Invoice

When you release a Sales Order to Invoice then axis diplomat uses the VAT code indicated by the Sales Groups against the stock items on that Sales Order at that time and does not use the VAT code in force at the time that the Sales Order was entered. In other words, you can enter a Sales Order in November for an item for which VAT will be charged at 17.50% and if you release that Sales Order in December then (assuming that you have followed the guidelines above) the invoice will include VAT at 15%.

You should therefore ensure that, if you are unable to invoice Sales Orders for goods or services supplied during November until December that less than fourteen days elapse before the invoice is generated so that the tax point becomes the date of the December invoice.

Customers that raise invoices for deposits against goods or services not yet supplied should also consult the HMRC documentation for further advice.

Links to HMRC Documentation

HM Revenue & Customs has produced a number of documents relating to the Pre-Budget Report. Those pertinent to the VAT changes include:

Summary of the Changes to the Standard Rate of VAT

Simple Guide to Changes to the Standard Rate of VAT

Detailed Guide to Changes to the Standard Rate of VAT

Treatment of Sales that Span 1st December

For full information, please consult the Pre-Budget section of the HMRC Web Site.