Pegasus CIS ( ) Guide to Prompt Payment Discount

Transcription

1 Pegasus CIS ( ) Guide to Prompt Payment Discount

2 Guide to Prompt Payment Discount Version 1.0 Pegasus CIS ( ) Copyright Pegasus Software, 2015 Manual published by: Pegasus Software Orion House Orion Way Kettering Northamptonshire NN15 6PE All rights reserved. No part of this manual or any accompanying programs may be copied, sold, loaned or in any way disposed of by way of trade or for any kind of profit or incentive without the express permission of Pegasus Software in writing, or as specified in the licence agreement which accompanies this manual and associated programs. Whilst Pegasus Software takes reasonable steps to ensure that the contents of this manual are up to date, and correctly describe the functioning of the programs, neither Pegasus Software nor any of its Partners give any warranty that the manual is error free, nor that the programs will perform all functions stated in the manual. Pegasus Software has a policy of continual improvement of its software and accordingly this manual may describe features which are no longer available in the current release of the software available to customers, or which are proposed for a future release of the software. Under no circumstances will Pegasus Software or any of its Partners have any liability to any customer arising out of any error, omission or inaccuracy in this manual. All trademarks are acknowledged.

3 Contents Who is this guide for?... 4 Prompt payment discounts; HMRC is changing the rules... 4 Impact on Pegasus CIS... 4 Sales Invoices offering prompt payment discount... 4 Adjusting the VAT Return... 4 Updated CIS, Opera 3 & Opera II versions... 4 Sage versions... 4 Before 1 April 2015: things to consider... 5 For customers... 5 For suppliers... 5 On 1 April 2015: setting up Pegasus CIS for the new ruling... 6 System Setup changes for prompt payment discounts... 6 System Settings... 6 How prompt payment discounts affect Customers and Suppliers Applications from 1 April Customers... 6 Purchase Ledger Jobs Your notes Guide to Pegasus CIS and Prompt Payment Discount Page 3 of 11

4 Who is this guide for? This guide is to help you understand how to manage the new rules for prompt payment discount from 1 April Prompt payment discounts; HMRC is changing the rules From 1 April 2015, when processing an invoice, VAT will be calculated on the goods value before any prompt payment discount is applied. This change will affect any business that either receives or gives prompt payment discount for prompt payment of an invoice. When the legislation change becomes effective, HMRC must receive the full value of VAT on an invoice if the settlement discount is offered but not taken. Impact on Pegasus CIS In order to provide the functionality required for prompt payment discounts the following areas of the product have been changed: System Settings a new field to state how VAT is to be calculated when discounting Sales Invoice Settings a new field for recording the discount adjustment in the nominal Introduction of a new sales based Transaction Type to record the discount adjustment Ability to record the next Settlement Discount Credit Note Number Job forms updated with new fields Invoice design amended to record details of VAT before and after settlement discount Job values recalculated upon upgrade These points are discussed in more detail later on in this document Sales Invoices offering prompt payment discount If prompt payment discount is offered, a separate set of VAT Totals are displayed on the Invoice design. This will allow your customer to make the necessary accounting adjustments in their software. The standard text on the Invoice design states that no Credit Note will be issued to the customer once prompt payment discount is confirmed as taken. Adjusting the VAT Return If the prompt payment discount is taken, an accounting adjustment will need to be made to post the discount and to adjust both the goods and VAT values on the VAT Return. In Pegasus CIS version receipts from customers that have taken advantage of the early payment discount offered to them must be processed through the Process Cash Receipts function in the Contract Sales area of the Customers application. If you take advantage of the early payment discount offered to you by your supplier, the discount taken will need to be processed via a Credit Note. This can be done in either the Pegasus CIS or Opera software. Updated CIS, Opera 3 & Opera II versions If you offer or receive prompt payment discounts terms, you must upgrade before 1 April You must also run Update Data Structures on all companies in your Opera software after upgrading your software. These are the updated versions: Pegasus CIS ( ) Opera 3 (2.22) Opera II (7.42). Note: In Pegasus CIS and Opera prompt payment discount is referred to as settlement discount. Sage versions The following versions of Sage products are supported with Pegasus CIS ( ) Sage Line 200 v2015 Sage Line 200 v2013 R2 Sage Line 50 Accounts Guide to Pegasus CIS and Prompt Payment Discount Page 4 of 11

5 Before 1 April 2015: things to consider You may want to consider these points before 1 April 2015 to smooth the transition to the new prompt payment discount rules. For customers 1. Invoices that offer prompt payment discount dated before 1 April 2015 must be processed under the old rules. Any receipts received that do take advantage of the discount will not require accounting for under the new rules. You may then want to consider billing all relevant unprocessed Invoices because after 1 April 2015 they must be billed using the new prompt payment discount rules 2. If possible, ensure any required credit notes for invoices with prompt payment discount raised under the old rules are posted before 1 April Otherwise the credit note will be processed using the new rules and you ll need to either post a VAT-only invoice in Opera to adjust the VAT or overwrite the VAT value when creating the Credit Note in CIS to match the VAT figure of the Invoice being credited. 3. Ensure that any invoices printed before 1 April 2015 do not include references to the new prompt payment discount rules. Any invoices posted before 1 April 2015 that are reprinted after that date will be printed with VAT values as they were originally calculated and without reference to the new rules. 4. Invoices with prompt payment discount offered that are raised from 1 April 2015 onwards will display the VAT value from the posting and also what the VAT Value would be if the prompt payment discount offer is taken up by your customer. 5. Give consideration to customised Invoice designs and whether the new prompt payment discount text will have any impact. 6. Give consideration to whether you need to set the Next Settlement Discount Credit Note Number in the Sales Setup area. 7. Give consideration to the Nominal Account that requires entering post-upgrade into the new field in Sales Invoice Settings. For suppliers 1. If you use Opera as your accounts system, consider whether prompt payment discount should be taken for invoices using the Authorise Cheques or Authorise BACS commands before 1 April This will allow the discount to be taken under the old rules. Important: The Authorise Cheques and Authorise BACS commands will not be available for discount processing under the new rules. 2. Try to resolve any supplier disputes involving invoices posted before 1 April 2015 and post necessary credit notes. Guide to Pegasus CIS and Prompt Payment Discount Page 5 of 11

6 On 1 April 2015: setting up Pegasus CIS for the new ruling Below are details of the changes made to allow VAT to be calculated before prompt payment discounts for home currency transactions in Pegasus CIS. System Setup changes for prompt payment discounts System Settings If your business is affected by the new prompt payment discount legislation you will need to give consideration to what point you decide to update your Pegasus CIS software to use the new rules. How does Pegasus CIS ( ) determine whether the new rules are effective? A new option has been added to the System Settings form called Calculate VAT After Settlement Discount. It is situated on the right hand side of the form underneath the default Sales and Purchase VAT codes. After upgrading your Pegasus CIS software from an earlier version the Calculate VAT After Settlement Discount setting will be displayed as Yes. This means that VAT will be calculated under the old rules i.e. before 1 April When you are satisfied that you have completed any processing required under the old rules i.e. the raising of any Credit Notes relating to Invoices posted to the application before 1 April 2015 you must set the Calculate VAT After Settlement Discount setting to No How prompt payment discounts affect Customers and Suppliers Applications from 1 April 2015 Customers Sales Invoice Settings To record the values relating to the reduction in goods value generated by prompt payment discounting in the nominal ledger a new field called Settlement Discount Nominal A/c has been added to the Nominals tab of the Sales Invoice Settings form. See screen capture below. Guide to Pegasus CIS and Prompt Payment Discount Page 6 of 11

7 When entering this Nominal Account consideration should be given to how you want the discount of the goods value to be accounted for in the linked financial system. After upgrading from a previous version this new field will be blank and must be populated with the relevant account before prompt payment discount transactions are entered. Set Next Settlement Discount Credit Number To assist Pegasus CIS users that specify their own Sales Invoice Numbers a new item has been added to the Sales Setup folder called Set Next Settlement Discount Credit Number. If you offer prompt payment discounts to your customers, the invoices generated will display the VAT calculated before any consideration of the settlement discount rate applied to the transaction. See the screen capture below: When printed, the Invoice will display settlement discount details that will inform your customer of the accounting adjustment i.e. the Goods and VAT reduction that is required. Below is an example of a Customer Invoice with the settlement discount text: The above text fulfils the requirement set out by HMRC and no Credit Note is required to be sent to the Customer. Guide to Opera and Prompt Payment Discount Page 7 of 11

8 Processing Cash Receipts The recommended practice for dealing with settlement discount taken by your customer is to process the money paid to you through the Process Cash Receipts function in the Contract Receipts area of the Sales Invoicing folder. This process will automatically deal with the prompt payment discount adjustments required and ultimately update the VAT Return in your Opera financials system. As in previous versions of Pegasus CIS the following message relating to the offer of settlement discount is given. Answering Yes to the prompt will deal with both the goods discount and the VAT adjustment required. As shown below, a new field called Settlement Discount VAT has been added to the Job and Sales Allocation Details section of the Process Cash Receipts form to identify the VAT amount that requires adjustment. After the Cash Receipt has been updated and approved a separate Invoice Discount line is created. The Allocate Sales form below shows the adjustment in the grid. Important: ID is a new Transaction Type created specifically for dealing with prompt payment discounts Guide to Opera and Prompt Payment Discount Page 8 of 11

9 The Invoice Status is now Closed. The Cash Receipt Allocation History displays that no payment is outstanding. After the Opera financials have been updated, the prompt payment deduction can be viewed in the Opera software using the Detailed VAT Audit Trail. It is the second transaction displayed in the report below: Guide to Opera and Prompt Payment Discount Page 9 of 11

10 Purchase Ledger Prompt payment discounts will ultimately be accounted for in the financial system linked to Pegasus CIS. HMRC has not mandated the need for your supplier to issue a credit note to deal with the prompt payment discounts as long as the Invoice that you receive details the information of the VAT adjustment required if you were to take advantage of the discount given to you. In Opera 3 (2.22) and Opera II (7.42) a credit note must be used to account for the VAT liability as well as the discount value of the goods or services. In order to record any Purchase Credits against the relevant Job it is advised that any Credits are raised through Pegasus CIS rather than Opera. It will be necessary for the purchase ledger clerk to have an understanding of whether the supplier is expected to confirm the VAT Adjustment required via a credit note. This may cause operative issues as the user may wish to pay the invoice to take advantage of the prompt payment discounts offered but is not aware of the VAT adjustment required. They will have to gain confirmation of the adjustment required and the supplier reference before raising the credit note in order to allocate and close down the transaction. The VAT calculation when raising a Purchase Invoice or Credit Note in Pegasus CIS is exactly the same as in the Sales application i.e. the new System Setup field Calculate VAT After Settlement Discount is used to determine the calculation method. For further details on prompt payment discount in Opera s purchase ledger refer to the PPD user guide on the Opera 3 Info Centre pdf Be aware that any VAT rounding or discrepancies with the VAT adjustment value detailed by your Supplier will need to be accounted for by raising a VAT only Invoice or a VAT only Credit Note. These can be processed in Pegasus CIS or Opera. Jobs Prompt payment discounts will have an effect on current and historic jobs. Important: When upgrading from an earlier version of Pegasus CIS the Job totals are recalculated and if any prompt payment discount was either given or received then recorded profit on Jobs may be different from previous versions. The Jobs forms have been enhanced to display the Settlement Discount figure as part of the Payment Due calculation on the Sales tab. The same changes have been made to the Sales tab of the Job Headings form that is viewed from the Items button on the Job form and the Sales tab of the Period Analysis form that is viewed through the Job Transactions form that is also available from the Items button on the Job form. Guide to Opera and Prompt Payment Discount Page 10 of 11

11 Your notes End of guide Guide to Opera and Prompt Payment Discount Page 11 of 11