Overview
To help the businesses on the back of Covid-19, the Irish government announced the rate of VAT will be reduced as part of the stimulus plan. The standard rate of Irish VAT will be temporarily reduced from 23% to 21% for six months, from 1 September 2020 to 28 February 2021.
The standard rate of VAT applies to approximately half of activity in Ireland and a wide range of goods and services, including the sale of motor vehicles, adult clothing, electrical goods, most household goods, many e-services, professional services and telecommunications.
There are multiple potential areas that you need to check in Surf Accounts that are listed below. We have also supplied potential solutions and introduced changes to help you manage the transition which will be referenced below.
We have deployed a 21% rate (for notional and foreign transactions too, if setup previously) for you, so you do not have to create any rates. You can simply change them where applicable i.e. on records or on defaults in Settings.
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This is general guidance for all of our users. It is up to our users on what action to take and when. Regarding any specific advice on what you should do or how something should be treated, you need to speak to your accountant or Revenue. |
Do I need to set up a new VAT rate?
No, you do not need to set up the 21% VAT rate manually. We will automatically create this for your business, along with any 0% notional VAT rates. You will be able to see the new VAT rate under Settings > VAT Rates. The newly created VAT rate(s) will contain “-21” as part of the code. It is recommended to use the VAT Rates we have created for you, as any manually created VAT Rates will not be able to be used in the VAT Change Wizard, which we will talk about in this guide.
What do I need to consider?
Please see table below for different areas to consider taking action. It is up to the user when to take action, but it is advised that it is done on all areas, when starting to create transactions dated September 1, 2020 or after.
| Area | How? | Action Needed |
|---|---|---|
| Customer/Supplier/Payee | Default VAT Rate may be set to 23% and this would be used on subsequent transactions. |
Single Record: Amend default VAT Rate on individual record. All Records: Use the VAT Change Wizard to update all that are 23%. Click here to see how you can use the VAT Change Wizard to apply VAT Changes. |
| Orders & Quotes | VAT rates are not automatically recalculated when you convert Orders or Quote to invoices. If converted with 23%, then the invoice will have 23%. |
No change needed but user will need to amend VAT Rate on converted Invoice. If saving transactions with 23% during the period, a warning will pop up to remind users. |
| Recurring Invoices | Recurring Invoices setup prior to change with 23%, that generate during the period, will generate with 23%. |
Single Record: Amend default VAT Rate on individual record. All Records: Use the VAT Change Wizard to update all that are 23%. Note: The changes won’t take effect until the last occurrence in August has been generated. Click here to see how you can use the VAT Change Wizard to apply VAT Changes. |
| Recurring Receipts and Payments | Recurring Receipts and Payments setup prior to change with 23%, that generate during the period with 23%. |
Single Record: Amend default VAT Rate on individual record All Records: Use the VAT Change Wizard to update all that are 23%. Note: The changes won’t take effect until the last occurrence in August has been generated. Click here to see how you can use the VAT Change Wizard to apply VAT Changes. |
| Credit Notes | Credit Notes need to match the VAT Rate of Invoice they are being allocated against. |
No change needed, but user needs to select correct rate accordingly. If saving transactions with 23% during the period, a warning will pop up to remind users. |
| Copied Transactions | VAT rates are not automatically recalculated when you copy transactions. If original has 23%, then copied transaction will have 23%. |
No change needed but user will need to amend VAT Rate on copied Invoice. If saving transactions with 23% during period, a warning will pop up to remind users. |
| Products | Default VAT Rate may be set to 23% for Sales and Purchases, and this would be used on subsequent transactions. |
Single Record: Amend default VAT Rate on individual record. All Records: Use the VAT Change Wizard to update all that are 23%. Note: This does not change the Net price, it only changes the default VAT rate. Click here to see how you can use the VAT Change Wizard to apply VAT Changes. |
| Bank Feed Rules | Bank Feed Rules with a 23% VAT Rate will be applied on feeds. |
User amends their bank feed rules. All Records: Use VAT Change Wizard to update all that are 23%. Note: After September 1, it is advised to be mindful of the date and rate used on transactions on feeds, as there could be transactions for before and after September 1. Click here to see how you can use the VAT Change Wizard to apply VAT Changes. |
| Imports | Imports that have 23% in period will be brought in with rate. |
User amends their imports, where applicable. |
| VAT Cash Basis | VAT is calculated when you raise the invoice, but it becomes payable on receipt. |
No change needed. |
| VAT Defaults | There are default VAT codes set in the system, some of which could be 23%. |
User amends defaults in here. |
| Future Dated Transactions | Future dated transactions in system from September to February with 23%, could be calculated wrong. |
User amends transactions dated in future with the correct rate. Click here to see how. |
How do I make changes?
Future Dated Transactions
Prior to the VAT Rate relief, you might already have set up one or more transactions with 23% VAT Rates beyond September 1, for example, sales invoices in October, November and December. It might be difficult to identify all such transactions manually and amend the VAT rates to 21%. This section shows how to identify and amend VAT rates for such transactions.
Steps
- On the left panel, click Reports.
1. On the Reports page, under the General Ledger Account Activity heading, click General Ledger Account Activity.
2. On the Account Details page, complete the steps as shown in the image below.
3. The report is generated and the image below shows how to identify the transactions with 23% VAT Rate and how to amend them.
VAT Defaults
When you set up your business, certain default VAT rates are provided and applied to the customer and supplier records. The default rates are available at the settings. However, you can amend default customer and supplier VAT rates at their individual levels. To amend default VAT rates globally, you can do so at the settings. Note that even if you amend the global VAT rates, it will apply onto to transactions created after the amendment.
Steps
Amending VAT Rates at Individual Customer or Supplier Levels
- To see the default VAT rate on a customer record, open a customer record and click the Invoice Settings tab. The default VAT code and rate is shown for all transactions of this customer.
- You may manually update the VAT rate and that will henceforth apply to all transactions for this customer.
Amending VAT Rates Globally
1. To globally apply VAT rates to all transactions, on the left panel, click Settings.
2. On the Settings page, under the VAT heading, click VAT Codes.
3. On the VAT Setup page, update the default VAT rates, as appropriate and click Save.
VAT Change Wizard
You may be having 23% VAT rate set on many customer, supplier and transactions and it is difficult to amend each manually to 21%. The VAT change wizard allows you to amend default VAT rates with 23% on all Customers, Suppliers and Payees records; Product purchase and sales; Recurring invoices, payments and receipts and Bank Feed Rules to 21% at one go. See the steps below.
1. On the left panel, click Settings.
2. On the Settings page, under the VAT heading, click VAT Change Wizard.
3. On the VAT Change Wizard section and do the following.
4. To change default VAT rates from 23% to 21%, under the From 23% to 21% heading, tick one or more appropriate areas and click Run. All transactions under the selected areas are updated with 21% default VAT rate.
5. All transactions under the selected areas are updated with 21% default VAT rate.
6. Note that all areas updated will move under the From 21% to 23% section.
7. To reverse the default VAT rate to 23%, tick the appropriate areas and click Run.
Best Practices
Check your 21% rate has been created
Go to Settings > VAT Rate > Confirm 21% VAT Rate have been created for you.
Change your defaults at a time best for you
It is recommended that you follow the above steps, for both the system defaults (under VAT Defaults) and record defaults (under VAT Change Wizard). Typically, this is best done on September 1 or when you start entering transactions for that date. For Recurring templates, if it best to change as soon as possible via the VAT Change Wizard as templates won’t be affected until the last occurrence in August has been generated.
Check for Future Dated Transactions with 23%
We recommend this is done initially, to check for transactions during the VAT change period , that use 23% which you can amend if desired. Once checked, we also recommend running this report before each VAT Return to check for transactions with potentially the wrong rate.