Sage One Help

VAT nominal accounts

In Sage One there are five VAT nominal accounts in the chart of accounts. When you enter a transaction, the VAT scheme determines which codes the VAT amount appears in.

2200 VAT on Sales
2201 VAT on Purchases
2202 VAT Liability
2205 VAT on Sales – Holding Account
2206 VAT on Purchases – Holding Account

Standard VAT

This information also applies to the Flat Rate Invoice Based VAT scheme.

When you enter a transaction that has VAT, the VAT amount posts against the VAT on Sales or VAT on Purchases account. For example, a sales invoice for £100 + VAT appears in the following ledger accounts:

Ledger Account Debit Credit
Trade Debtors 120.00
Other income 100.00
VAT on Sales 20.00

VAT Cash Accounting

This information also applies to the Flat Rate Cash Based VAT scheme.

When you enter a VAT-applicable invoice, the VAT amount posts against the VAT on Sales – Holding Account or VAT on Purchases – Holding Account. When you run a VAT return, the transactions that post against these holding accounts aren’t included. For example, a sales invoice for £100 + VAT appears in the following ledger accounts:

Ledger Account Debit Credit
Trade Debtors 120.00
Other income 100.00
VAT on Sales – Holding Account 20.00

When you enter a payment or receipt against an invoice, the VAT amount transfers from the relevant holding account into the appropriate VAT on Sales or VAT on Purchases account. This simple process means that the VAT amounts are held separately from the traditional VAT nominal accounts, until they are due to appear in the VAT return. For example, a receipt against the above invoice posts the following transactions:

Ledger Account Debit Credit
Trade Debtors 120.00
Cash at Bank 120.00
VAT on Sales – Holding Account 20.00
VAT on Sales 20.00

When you run a VAT return, these transfer transactions are included.

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