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UK VAT RATE CHANGE

THIS NOTE APPLIES TO ALL CUSTOMERS REGISTERED FOR VAT IN THE UNITED KINGDOM

The standard rate of VAT goes back to 17.5% at 12:00am, 1st January 2010. This guide describes how this change affects your business and the steps you should take to configure your NetSuite account.

RECOMMENDATIONS:

We strongly recommend that you:

• Read this document completely before making any changes in your account.
• Run your VAT reports for the current unfiled period (to 31st December or current date) before making any changes to your records or entering any transactions.
• Run the VAT reports after the changes and check that all the figures are the same.

What is the impact on my business?
For any sales of standard-rated goods or services that take place on or after 1st January 2010, you should charge VAT at 17.5%. The new rate will affect:

• Supplies of goods and services made on or after 1st January 2010;
• Imports on or after 1st January 2010, and
• Acquisitions of goods from other EU Member States on or after 1st January 2010.

You need to have decided whether the business wishes to increase the gross selling price or keep it the same (effectively reducing the net item price).

For more details on how this change impacts your business please see the HMRC Guide. If you have further concerns, consult your accountant or local VAT office.

The NetSuite tax engine requires no software updates, but a few simple configuration changes are required to your account. Using its SuiteBundler technology, NetSuite has developed a solution that automatically updates your tax codes list, items, and open sales and purchase orders that you may have as of 31st December 2009.

To help you understand the steps to take, we will also be hosting a free training session on Thursday, 17th December 2009, 4:00pm GMT. To register for this training, please click here.

How does the rate change impact my NetSuite account?
These are the areas to be aware of:

• For a short period of time you will require two standard rate tax codes, 15% and 17.5%, in case of late bills, the need to issue refunds, etc. In certain cases, you may want to apply the special rules approved by HMRC where you choose to invoice your customers at the 15% rate. NetSuite will set up new tax codes so that you retain this flexibility.
• The note above is also true for EU zero rated tax codes for the purposes of reporting notional VAT values on EU purchases.
• The standard rate tax code on your item records should reflect 17.5% from 1st January 2010.
• The shipping item tax code should reflect the 17.5% tax rate.
• Sales orders with the status "Pending Fulfillment" must have their tax codes updated to reflect the new 17.5% rate. This includes partially fulfilled sales orders.

What tools is NetSuite providing to help me make these changes?
We have developed a SuiteBundle so that all the above changes can be made at a date of your choice. Once this bundle is installed, you will be able to choose the date when you want the changes to take effect from. Note that the default time and date is set to 12:00 am on 1st January 2010.

This bundle will:

• Update the existing Standard Rate (S) tax code rate from 15% to 17.5%. without impacting historic transactions
• Set up a new tax code (TS) at 15% if one does not exist.
• Set up a new ES2010 tax code for EU transactions. You need to modify this by checking the EU Code and Export checkboxes and setting the notional value rate to 17.5%. No changes are required to the TES tax code.
• Set up a new Reverse tax code (R2010) which should edit and select the 17.5% notional rate.

NetSuite will look at your existing tax code set up too, and modify as appropriate, so do not worry about the names given to existing tax codes or dates in the "Valid From" or "Valid To fields". We will take care of that via the rates, including changes made last year.

We intend to provide you with the option to either reduce your net price or leave it unchanged for every standard rated item. More details will be provided in the next 48 hours and at the training session.

How do I install this bundle?
You need to be logged in with the Administrator role in order to install the bundle and initiate the running of the scripts.

1. Go to Setup > Customisation > Install Bundle.
2. Enter the following criteria:
• Location = Repository,
• Availability = Public
• Keywords = UK VAT Rate Change January 2010
3. Click Search.
   
4. This should bring up the details of the UK VAT Rate Change January 2010 bundle with ID 7282.
5. Click the link.
6. Read the documentation for this bundle.
7. Click Install.

Steps to follow after installing the bundle:

1. Go to Setup > Custom > UK VAT Rate Change.
2. Select the standard rate tax codes you use at present for sales and purchases.
3. Check the Set up tax codes and update Item Lists box.
4. Select whether you wish to keep your selling prices the same or not.
5. If you want to update the tax codes on open sales orders check the Update tax codes on open sales orders box.
   
6. Choose when you want to execute these changes. Click Submit.

Depending on your business needs you may want to make the changes immediately (especially if the office is closed over the festive season) or schedule the changes for a selected date such as 1st January 2010 (for example if you sell goods online via a web store).

Steps to follow after running the bundle:

Carry out the following checks after running the bundle:

• Review the tax code list for the UK at Setup >Accounting > Tax Codes.
1. You should have tax codes for two standard rates: 17.5% and 15%.
2. You should also have two tax codes for EU sales and purchases. Edit the newly created ES tax code and ensure that the EC Code and Export boxes are ticked and Notional Rate is set to 17.5%.
   
3. At a later date, when you are no longer expecting to issue invoices or receive bills at the old rate of 15%, we recommend that you inactivate all tax codes with the 15% rate.
• Review the tax code on the items list at Lists > Accounting > Items. In the footer, select Type = All and View = Basic.
• Check the net prices of all your items.
• Check the tax codes selected for shipping items at Lists > Accounting >Shipping Items. On the Shipping Rules subtab, make sure the tax code selected in reflects the tax code for the 17.5% rate.
• Before any new transactions are entered, run the VAT reports, and verify that that the existing VAT amounts did not change as a result of installing the bundle

QUESTIONS:

Support Contact Information
If you have questions, please call NetSuite Support; our ERP/Accounting representatives will be pleased to help all customers who have questions regarding VAT changes.

PLEASE CONTINUE TO MONITOR THE NETSUITE USERGROUP FOR ADDITIONAL OR URGENT INFORMATION. https://usergroup.netsuite.com/users/index.php

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