DRS Deposit Return Scheme

How to handle it

You will need at least 2 Analysis Categories

• 1 for Purchases
• 1 for either Sales Book or Cash Receipts (depending on which you use to record your sales).

If it's sales book then you will probably need 2, 1 for charging it and 1 for refunding it, because you can't pick the nominal code on sales invoices.

NOTE: This could be handled by journals but that may difficult to keep track of.

3 Nominal Codes

• 1 for return scheme payments on purchases from Suppliers, that's an 'Overhead' or 'Cost of Sales' nominal

• 1 for return scheme sales to customers, that's an 'Other Income' nominal

• 1 for return scheme refunds given to customers who come to the till or use the machines in store and get the vouchers from them, that's a 'Cost of Sales' or 'Overhead' nominal#

Currently there's no known difference between handling of the returns manually or through a machine as far as issuing the refunds goes so we've no reason to split those up at this point in time. If you wish to do this, you can however.

Product Codes

Either 2 or 4 will be required

•  DRS1 and DRS2 for the 15 cent and 25 cent charges, these should be set up with unit price 0.15 and 0.25

• DRS1V and DRS2V (for voucher) for the refunds of those items, these should be set up with unit price -0.15 and -0.25 (It is entirely up to the you to decide if you will do the vouchers through credit notes or not)

If you are using 4 product codes then use the DRS1V/DRS2V voucher codes on sales invoices to show a refund of the DRS.

There's no VAT liability on supply chain transactions.

This means that purchases from a supplier record the return scheme charge at 0% vat.

A vat liability is created on re-turn charges that are collected during a re-turn period (which is an unspecified amount of time) which are not refunded in that period.

That doesn't say yet whether or not the un-refunded return scheme amounts are treated as a net or gross value.

It seems to be that they're treated as a net amount (since no vat was calculated on them originally) but that doesn't make much sense since it's billed to customers like a gross amount.

PLEASE NOTE:

`Under VAT law, the deposit amount will be regarded as nil when the drink product is moving through the supply chain. A VAT liability will arise on the deposits when empty plastic bottles or cans are not returned. In this case, the operator of the scheme will be the person who is liable for the VAT due.`

https://www.revenue.ie/en/vat/deposit-return-scheme/index.aspx, 30/01/2024