T9 Transactions (again)


Hi All,

I'm about to start preparing my December VAT return and am aware of a difference between my nominal ledger and the VAT return. The difference arises from a T9 transaction (input VAT on a journaled entry) on the nominal ledger that does not report to the VAT return.

My VAT nominal ledger accounts are:

2200 Output VAT

2201 Input VAT

2202 VAT liability

My understanding is that when the VAT return is generated and submitted, all of the transactions on accounts 2200 and 2201 that report into the return are transferred to account 2202, ready to meet with the payment. This leaves any previously posted T9 transactions on accounts 2200 and 2201.

In order to claim the correct input VAT, I intend to make an adjustment when preparing the VAT return, so that the input VAT total on the return agrees to the accumulated balance on account 2201.

If I do this, am I right in thinking that once the return is submitted, the transfer from accounts 2200 and 2201 will leave the T9 transaction on account 2201 and once the return is paid, there will be an equal and opposing balance on 2202 (due to the return and payment being less than the amounts transferred to 2202)?

All I then need to do is journal the equal and opposing difference between accounts 2201 and 2202 and everything is as it should be?

  • 0

    Hi Edward,

    Thanks for using Community Hub.

    T9 is the tax code for non-vatable transactions, i.e. transactions that are outside the scope of VAT and should not appear on your VAT Return. T9 is often used as part of the double-entry for transactions posted. You're right about the nominal codes for sales tax, purchase tax and liability, as part of the reconciliation process the balances of the two tax accounts are journaled to the liability account on a T9 code so the value is ready for you to pay to or reclaim from HMRC.

    In the first instance, I would check that T9 is configured as your non-vatable tax code. You can check this in Settings > Company Preferences > VAT > VAT Details.

    In normal processing you wouldn't journal directly to your control accounts (2200 / 2201) which leads us to what the journals you posted were for and should they be posted another way using a tax code that will include them on the VAT return? I think that's the key to resolving this for you.


    Sage UKI

  • 0 in reply to Andy Rickeard

    Hi Andy,

    Thanks for the reply.

    I've investigated the underlying transaction, it's not a journal but a credit note for VAT only and it is correctly posted to the VAT accounts. I've spoken to the person that entered the credit note, they agree that they shouldn't have used T9. I imagine they used T9 to avoid the VAT being calculated automatically instead of using this method:

    How to create a VAT only invoice or credit (sage.com)

    On the basis that the entry does belong on account 2200/2201, would I be best off using an adjustment on the face of the VAT return and clearing the difference to 2202 as I mentioned above?

  • 0 in reply to Edward York

    Is it correct? Why would you post a credit note to T9 for the VAT amount only to 2200 or 2201?

    You mention you:

    "In order to claim the correct input VAT, I intend to make an adjustment when preparing the VAT return"

    When you do this a journal will be posted to 2204 (adjustments).

    All of a sudden you have the original T9 value on 2200 as a debit and then the same value again on 2204 as a debit, which won't offset each other.

    Why wouldn't it be T1, it would then appear on the VAT Return without the need for an adjustment and get cleared down as part of the VAT transfer process.