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Tax codes

Tax code setup, done once

Tax code setup — VAT codes, in the app’s own words — is where VAT quietly goes wrong: one bad rate and you have mischarged a customer and misreported a quarter. Set your VAT codes up once, with the rate, the ledger accounts and the legal text on each, and every invoice calculates itself from there.

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The Invoice Office VAT codes screen listing each code with its description, its VAT type — sales or purchase — its percentage and whether it is the default

Compliance, simplified

Set your tax codes up once, get VAT right always

Complex tax obligations turned into a simple process: accurate, quick and compliant, so you can get back to running the business rather than researching rates.

A code, a rate, a treatment
Each VAT code carries its code, description, type and VAT type. Set it once and every document line that uses it is treated the same way, without anyone deciding per invoice.
Rates that change on a date
A percentage is held with a start and end date, so when a rate changes you add the new period to the same code. Old documents keep the rate that applied when they were raised.
Points at your ledger accounts
Every code names the ledger account for VAT to pay and the one for VAT to claim, which is what puts the amounts in the right place in your books without a second entry.
The legal text, per language
A reverse-charge or exemption sentence can be stored on the code for each language you invoice in, so the right wording prints on the document your customer actually receives.
Feeds the VAT declaration
Codes are assigned to the sections of your VAT declaration layout. That mapping is what turns a period of documents into a return laid out box by box.
Default, preferred, or blocked
Mark the code most lines should use as the default, flag the ones you reach for often as preferred, and block the ones you no longer want anybody picking.

From code to document

The right rate, every time

A code is only worth setting up if it reaches the document by itself. These are the four points where that happens — what carries the code, when the VAT is worked out, how far down the rate can go, and how you get your existing codes in.

See the ledger accounts your codes post to

  • Set once, applied everywhere

    Codes attach to your products and ledger accounts, so the VAT on a line is decided by what you are selling rather than by whoever is typing the invoice.

  • Calculated as you invoice

    VAT totals are worked out on the document as it is created, and shown per rate, so the figure on the invoice and the figure in your return come from the same place.

  • State and local rates where they apply

    For regions that tax below national level, a percentage period can also carry state, county and city rates. It is an option for the places that need it, not something in your way if you do not.

  • Import your existing codes

    Moving from another system? Import your VAT codes and your ledger accounts from a file rather than retyping the lot, with sample files showing the shape expected.

How it works

Compliant in three steps

  1. Step 1Create the code

    In Settings, then VAT codes, give the code its description, type and VAT type, and name the ledger accounts VAT should be paid to and claimed from.

  2. Step 2Add the percentage

    Set the rate with the dates it applies between. When the rate changes later, you add the next period rather than starting a new code.

  3. Step 3Map it to your return

    Assign the code to the sections of your VAT declaration layout, add the legal text for each language you invoice in, and every document from then on carries it.

Tax code questions, answered

What is a tax code (VAT code)?
It is the rule that decides how a line is taxed. A VAT code holds a code and description, a type and VAT type, the ledger accounts VAT is paid to and claimed from, and one or more rate periods. Put it on a product or a ledger account and every document line using it is treated the same way.
What happens when a VAT rate changes?
You add a new percentage period to the existing code, with the date it starts. Because rates are held with start and end dates, documents you raised earlier keep the rate that applied at the time, and new ones pick up the new rate automatically.
Where does VAT end up in my books?
Where the code says. Each code names a ledger account for VAT to pay and one for VAT to claim, so the amounts post to the right accounts as the document is created rather than being sorted out later.
Can I print a reverse-charge or exemption notice?
Yes. A VAT code can carry a legal text for each language you invoice in, so the correct wording appears on the document your customer receives in the language they read.
How do VAT codes connect to my VAT return?
Through the VAT declaration layout in your settings. Codes are assigned to report sections, and those sections are the boxes on the return — which is why the tax return report can total a period straight out of your documents.
Does it handle taxes below national level?
Where they apply, yes. A rate period can carry state, county and city percentages alongside the country rate, for regions that tax at those levels. It is an option that is switched on for the installs that need it.
Can I bring codes over from another system?
Yes. VAT codes and ledger accounts can both be imported from a file, and there are sample files to show the format expected, so a migration does not mean retyping your whole tax setup.

More answers in our FAQ and help center.

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Where your tax codes end up

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