As you’re probably aware, VAT in the UK will be going up to 17.5% on the 1st January 2010.  This means that you’re going to need to change the way you do things, so that your invoices will show the correct tax amounts.

Fortunately for our Pearl users, the following will be done for you:

If your company default tax rate is set to T5 (15%), then on January 1st we will update this to T1 (17.5%). We will not change the rates on any open sales or purchase orders, since the tax amount relates to the tax date  on each invoice.

We’re not going to change the tax rate on your products unless you tell us. This is because your products are stored as net price plus tax, and changing the tax rate will affect the price that your customers see. You will need to change the tax code on your T5 products to T1, so that all future invoices are created correctly.

To make this nice and simple, we have a little magic elf that will update your prices for you at midnight on December 31st. Just make sure that you’ve told us using the option on your setup screen!

What we’ll do if you choose “yes”:

1. Work out the gross price including 15% of all your taxable items
2. Adjust the net price so that when the VAT is updated, the gross price remains the same
3. Update all T5 (15%) items to T1 (17.5%)

Just to remind you, we won’t be changing any tax rates on any open sales or purchases.

If you want to handle this manually, then you can choose what to do for each product separately, or by using the powerful batch processing tools in Pearl.

There’s a good bit of background reading over on AccountingWeb, by Debra Dougal.

This entry was posted on Sunday, December 6th, 2009 at 1:56 pm and is filed under Money, System & service news. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.