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What are the different Brightpearl VAT codes?

Brightpearl VAT Codes

Knowing which VAT code to use in Brightpearl can be a minefield – especially if you are selling or buying goods or services from outside the UK.  Here is a guide to point you in the right direction and looks at the Brightpearl VAT codes to be used when buying and selling goods internationally.

It is important that you get VAT right – so if you have any questions, or you aren’t sure how something should be treated, make sure you check with your accountant!

Sales

There are five VAT codes that can be used for international sales in Brightpearl.  Four of the codes result in no VAT being charged to the customer, but you still need to get the code right as Brightpearl reports the different types of sales different ways on your VAT return.

T0 For when you make zero-rated sales.  The most common things that are zero rated are books and children’s clothes.
T2 For when you make VAT-exempt sales.  The most common things that are VAT exempt are financial services.
T20 For when you make a normal sale within the UK, and also when you sell to an EU customer who does not have a VAT number – these customers must be charged UK VAT.
T4 For when you sell to an EU customer who does have a VAT number – these customers are not charged UK VAT.
T9 For when you sell to a customer who is outside the EU.

 

How this looks on your VAT return

Box 1 The total VAT amount from all T20 sales
Box 6 The total net amount from all sales except T9
Box 8 The total net amount from all T4 sales

 

(NB: When you submit your VAT return, having a figure in box 8 will prompt HMRC to ask you to start filling in EC Sales Lists).

 

Purchases

There are six codes that can be used for purchases in Brightpearl.   Only one of them actually results in VAT being reclaimed, but you still need to get the code right as the different types of purchases are reported in different ways on your VAT return.

T0 For purchases that are zero rated.  This includes things such as books and printing.
T2 For purchases that are exempt from VAT.  This includes things such as financial services.
T20 For purchases that have been charged at the standard VAT rate.
T7 For goods bought from the EU where the goods would be zero rated if they had been bought in the UK (e.g. children’s clothes) and the supplier is VAT registered in their own country.
T8 For goods bought from the EU where the goods would be standard rated if they had been bought in the UK and the supplier is VAT registered in their own country.
T9 For purchases where no VAT has been charged because the supplier is not registered for VAT or is outside the EU.

 

How this looks on your VAT return

Box 2 The calculated VAT amount from T8 purchases.  There is no VAT amount on the actual purchase transaction itself; this is worked out by Brightpearl.  The same amount is also automatically added to box 4 so the net result is that you don’t pay any VAT.
Box 4 The VAT amount from the T20 purchases plus the box 2 figure.
Box 7 The net amount from all purchase transactions except those which are T9.
Box 9 The net amount from all T7 and T8 purchases.

 

Goods purchased from outside the EU where VAT can be reclaimed.

Sometimes you will buy goods from outside the EU that are then imported into the UK.  The supplier themselves will not charge you any VAT, but you will receive a separate VAT invoice from the import agent.  This VAT can be claimed back when you get your C79 form from HMRC.

We’ll cover this process in a future blog post or you can contact us now if you need to know more!

We are experts in Brightpearl accounting and bookkeeping – check out the Brightpearl services we could offer your business.

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