VAT Rates in Spektrix

Billy Fluck
Billy Fluck
  • Updated

Spektrix automatically calculates the VAT on any items sold through the system.  This article explains how that information is stored and how it affects reports and invoicing.

How we calculate VAT (and why)

The Challenges

One of the things to consider when calculating VAT is that the rates are liable to change and, if they do, any items that have already been sold must be calculated on the old rate whilst all new sales must be calculated on the new rate.  

You may have used systems which let you specify a VAT rate of X% in the system. That rate is then referred to in reports to do the tax calculations:

Date of Sale Item Event VAT Rate Price VAT Net
02-Jan-11 Ticket Sale Macbeth 17.50% £10.00 £1.49 £8.51
03-Jan-11 Ticket Sale Macbeth 17.50% £10.00 £1.49 £8.51

The trouble with this method is that when you change the VAT rate the system doesn't know what the old rate was and you can no longer accurately report on historical sales:

Date of Sale Item Event VAT Rate Price VAT Net
02-Jan-11 Ticket Sale Macbeth 20.00% £10.00 £1.67 £8.33
03-Jan-11 Ticket Sale Macbeth 20.00% £10.00 £1.67 £8.33
04-Jan-11 Ticket Sale Macbeth 20.00% £10.00 £1.67 £8.33

How it works on Spektrix

Whenever you set anything up on Spektrix you have to tell the system which tax code should be applied to that item when it is sold. The tax code will vary based on the items you're selling and your organisation's status.  For example, charities may not be liable to pay any tax on tickets sold for their own events (the tax code would therefore be "Exempt") whereas memberships should be taxed at the standard rate (tax code = "Standard").

You can find more information on the tax bands on this website from the HMRC

When an item is sold, Spektrix looks up the current VAT rate for that item and records it in the database. This means that the system always knows what the VAT rate was for an item at the time it was sold. If the VAT rate changes then Spektrix will update the VAT rate for each tax band and records the new rate on any new sales. Previous sales will not be affected. 

Date of Sale Item Event Tax Band VAT Rate Price VAT Net
03-Jan-11 Ticket Sale Macbeth Standard 17.50% £10.00 £1.49 £8.51
04-Jan-11 Ticket Sale Macbeth Standard 20.00% £10.00 £1.67 £8.33

Because the rate at time of sale is recorded in the system we can always report VAT accurately, even if you report over periods which contain different VAT rates. This also means that any invoices will always remain accurate and unchanged by VAT changes.

Editing the VAT rate

You will set the VAT rate whenever you create a new item in Spektrix. For example, if you go to Admin > Other > Merchandise and create new Merchandise item, the system requires you to select a Tax Code before you can complete the setup.

If you wish to change the rate, you just need to go back to this screen and edit the merchandise item, then change the Tax Code. It's important to remember changing the Tax Code will only change the VAT rate on future sales – all previous sales are already recorded in the system.

If you need to change the rate on sales that have already been processed then please contact the Support team. We can make changes at database level but we don't generally advise it. If we re-write VAT rates on previous sales then any invoices or reports that you have raised in the system will change – meaning that you will need to reissue them to third parties with the new VAT amounts on.

Further reading

Understanding Tax Rounding in Reports