How can I account for reverse charged services?

The “apply reverse charge” box is what you want. Enter the £150 the supplier charged you as the net amount on the QuickFile purchase, set the VAT rate to 20% and tick the reverse charge box. This will show £30 VAT as added on at the line level (making the line total £180) and then deducted again in the footer as “EC VAT exemption”, and the final invoice total will still be £150.

However, when it comes to the VAT return this will be treated as an acquisition of goods rather than a reverse charge transaction for services, so you need to make a couple of adjustments to your return using the drop down arrows. EC acquisitions put the VAT in box 2 and the net in box 9, whereas reverse charge transactions need the VAT in box 1 and the net in box 6, so you need to adjust:

  • +30 to box 1
  • -30 from box 2
  • +150 to box 6
  • -150 from box 9

This doesn’t affect the total amount of VAT so there’s no further adjustment required.

@QFMathew any chance you could add proper handling for reverse charge services as well as goods transactions so we don’t need to jump through these adjustment hoops?

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