You need to change from add-on tax mode to vat. Two main flag settings

Key to P2
strt
sel
input
12
dsgn
1000
input
50
dsgn
10000011 (you only need the last two one's-just leave the other digits as they appear)
input

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Thanks for all your help before

Still having a little trouble however. For some reason the tax rate is at 15% even though I set it at 17.5%... I've experimented and changed it to other rates, which all seem to work apart form 17.5...

Do you have any ideas?!

when you change the tax rate did you use 6 digits in setting the rate?
21% = 210000
17.5% = 175000

Are you using departments or plu's?

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PLU's and yes, i inputted the 6 digit number for the tax rate

If you can check what main flag settings are on the register, look at main flag 21 which controls whether or not plu flags copy dept flags

P2/Start/Slct/Print

or Start/Select/Input then press input until you reach flag 21 in order to view settins

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flag 21 reads:

21 01 00000001

I've worked out the tax manually from the z reports taken at the end of each day and when I set VAT rate to 20%, the actual VAT comes out at about 18%. Is it possible that some sort of rounding is occurring?

Just re-read your posts and see that you are using plu's. Main flag 21 bit 1 is set to 1 which means that plu flags will default to the department flag settings.
When you set flag for tax are you setting within department. This is where you need to set them in this setup, either that or change flag 21

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