Domestic Reverse Charge and VAT reporting

[Richkav]

Hi all. We have been using quick file for a number of years now and our VAT has always been on a cash accounting basis.
We are affected by the domestic reverse charge VAT scheme and as such a very high percentage of our turnover will be covered by it.
Do I change my VAT set up in quick file on the 1st of March to accrual accounting which will then affect the VAT return. Which will be due on the 31st of March or do I wait until the 31st of March finalise that return and then change over from the 1st of April. If I do the latter how do we account for the loss of the VAT on all the invoices affected by the reverse charge in March.
Thank you all in advance for your advice

[QFBeth]

Hi @Richkav,

I would recommend that you seek advice from your accountant. With the first return using the new scheme you will have to make a lot of manual adjustments. It may be best to wait until the end of your VAT period before making the change.

With Cash accounting when the VAT return is run the payments are locked - invoices are not

With Accrual accounting when the VAT return is run the invoices are locked but the payments are not.

This means that when you run the first return under accrual accounting it will pull in all of your previous invoices even if they’ve been included in your previous returns because only the payments associated have been locked.

[ian_roberts]

I don’t think it’s necessarily a problem to stay on cash accounting - invoices that are in scope for the reverse charge need to be reported on accruals basis but that will presumably be handled automatically by QuickFile the same way as they used to do for EC acquisitions, there’s nothing stopping you continuing to use cash accounting for your non-RC sales and purchases if that’s still better for your cashflow.