Explanation of tax codes (for a non-accountant)

[michellepace]

Hi there,

Below are the tax codes which I get by default after setting up a new company. What I don't understand is - what would we want different tax codes when all the percentages are the same? For example, why don't I just have a tax code called "Standard VAT 15%" and that is it. What use is it for my accountant come end of financial year to have a tax report broken down by code?



Ever learning, .. thank you.
Michelle.

[dellatjie]

Hi Michelle,

The purpose if the different tax types are that you have to complete some items on different places of the VAT return. For example capital goods.


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[michellepace]

Thank you very much, that makes complete sense. Could I ask someone to please make a screenshot of their tax table which is relevant for vat returns for a small business ? I see the defaults in the demo company but I’m not sure if the tax types are perhaps a bit out dated.

Lastly we also have “customs vat” which is at a rate of 100%. Would I create a tax type for this in my pastel?

[dellatjie]

It totally depends on the type of business. If it were a guesthouse, I would leave accommodation there. If you sold fuel or bread, I would leave zero rated there, for example.


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