Adwords Reverse Charge VAT

[SarahJH]

I’m sorry to have to go over this again as I myself have asked about it before and I know many others have too, but I have managed to confuse myself! How do you account for reverse charge VAT for Google Adwords? I have ticked the box for EC supplier for VAT purposes but I have read elsewhere that as this is an electronic service the place of supply for VAT purposes is the country in which you (the customer) are based i.e. the UK.

I have ticked the ‘Apply VAT reverse charge’ box on the invoice.

On the link given http://help.quickfile.co.uk/main/1/vat_rates_explained.htm?searchTxt=adwords&criteria= it states you should see the VAT applied in Box 1 and revoked in Box 4. I don’t know if it’s included it there but I can see it in Box 2 and also Box 9. I don’t have any other acquisitions from other EC states and as mentioned I didn’t think this was from another EC state as it is a digital service. Please could you clarify exactly which boxes I need to adjust and assure me that is is being accounted for other boxes (and which they are)! Very confused! Many thanks!

[Glenn]

By default QuickFile accounts for EC acquisitions as if they were goods rather than services, so some figures would need to be adjusted for services, although none affecting the tax calc (which would be zero).

In the case where a business pays £100 to Google for Adwords.

• On its VAT return, the business will include £20 of VAT in box 1 (standard UK rate 20%).
• This would then get reclaimed again in box 4.
• The £100 net expense then gets added to box 6 and box 7.

For EC purchases QuickFile will put the NET in box 9, this needs to be moved to box 6 and the VAT in boxes 2 and 3 need to be moved to box 1.

Before

After

[SarahJH]

Thanks Glenn - much appreciated! I think I’ve got that now. Any chance of this being automated in the future?