Tax rates in Tradebox One
Author: Graham McLauchlin
8 days ago Updated
VAT legislation is a complex field with a number of grey areas and legislation that changes over time. The Tradebox team are happy to provide information around how the VAT settings in our software works and how it interacts with your accounts software where applicable.
If you’re in any doubt over what the correct way to process something is or the VAT status of an item/region with regards to your business, we suggest raising this with your accountant or with HMRC’s VAT enquiries service. The accountability for reporting accurately to tax authorities rests with your business and not with the providers of any software you use to process.
Within Tradebox One, tax rates are controlled in Configuration > Tax Rates.
Tradebox comes with five tax rates by default:
- Zero rated (0%); Standard rated (20%);
- EU B2B sales (0% for selling business-to-business to an – EU customer who has provided you with their VAT number);
- Non Vatable (for businesses not registered for VAT or items that don’t need to be reported to HMRC at all);
- Reduced Rate (5%).
The Tax Rates Grid
No. – Tradebox’s internal reference number of the tax rate. In most areas of the program we’ll surface the description of the tax rate. In areas where this would cause significant slowdown (e.g. adding the Tax Code column to the Products list), the No. is surfaced instead.
Description – Description of the tax rate.
Rate – The percentage of VAT tied to the rate. Settings within each sales channel will determine if this is used in addition to a net price, or taken away from a gross price.
EU B2B Sales – One tax code only must be selected as your EU B2B sales code. This will be used on any order where the channel settings or customer record indicate that the sale should be processed as EU B2B and the shipping address on the order is to an EU country.
Default – One tax code only must be selected as your default tax code, first chosen during Tradebox’s initial setup wizard. Its main use is to determine the tax code of new product records, unless a different tax code is specified at the point the product record is created.
In the tax rates screen, you have the options to create a New tax rate or to Edit an existing one. In general, we wouldn’t recommend editing the existing rates. If you have need of additional rates e.g. for selling goods that are sold at a higher reduced rate, or to track sales to a non-UK country in which you’re also registered for VAT, you should create these as new tax rates rather than amending the existing ones.
To create a new rate, click New and give the rate a description and a percentage up to 2 decimal places, then click Save. You’ll then be able to apply the rate via the Customer Record, Countries screen, Sales Channel Details or Product Record as applicable.
Tax rates for Sage users
If you’ve set up an Accounts Link, as well as Tradebox’s tax rates your processing will also be impacted by the tax codes in your Sage package. In all instances, Tradebox will calculate VAT based on its own settings. Once VAT is calculated and a tax code applied in Tradebox, the corresponding Sage Tax Code will be used when the order is posted to Sage. The mapping between the Tradebox tax rate and the corresponding Sage tax code is channel-specific and is set in each Sales Channels > Sage 50 > Tax Codes.
Sage’s own logic is capable of overriding Tradebox’s tax code instruction when the order is posted to ledgers Sage. This will happen if:
- A user changes a tax code of any element after the Sales Order/Invoice is created but before the point when the Invoice is Posted (Update Ledgers)
- The Global section of the Footer tab of the Sales Order or Invoice is populated, either manually by a user or by Tradebox using Sage’s Global Settings (Sales Channel > Accounts > Posting > Global Postings)
Note – The Use Default Tax Code For Sales tickbox in the Defaults tab of the Sage Customer Record is ignored by Tradebox One. This is a change from Tradebox Finance Manager.
Sage’s logic will also force a full recalculation of all amounts on an Invoice or Sales Order if a different Customer Account is selected (before the invoice is updated to ledgers). This is intended behaviour in Sage such that customer-specific discounts still apply if the order was initially raised against a different customer account; for Tradebox users that can mean Sage recalculates a different VAT value than was originally calculated and supplied by the marketplace if the customer account is changed.