I have just submitted my first MTD VAT return using QF. I first downloaded the calculations and checked that the correct sales and purchases were listed, which they were. What I failed to notice was that QF had included amounts for services supplied to and from other EC member states in boxes 8 and 9, which is incorrect (the services were not associated with the supply of goods). As a result of this, I have submitted an incorrect form. My fault for not noticing, of course, but I was lulled into a false sense of security by the fact that QF is approved by HMRC for MTD and by having found QF to be generally accurate and reliable.
I have subsequently discovered various discussions on the community about this or closely related issues. I see that QF are aware of the issue, but have previously said they don’t want to do anything about it until they know what is happening with Brexit. Perhaps since Brexit is taking longer than expected to happen and might not even happen at all, QF could reconsider this.
Even if QF do not fix the root cause, they should seriously consider putting a warning against boxes 8 and 9 on the VAT return screen saying that a manual adjustment must be made if services were made to or from other EC member states. That might just save other users from ending up having to call HMRC to find out how to correct their VAT return.
Even though Brexit is taking longer than anticipated, we’re not likely to change anything here before Brexit takes place, or announced that it won’t happen at all.
VAT is a vastly complex area and it’s not possible for us to support every single use case, especially with the various schemes available. Partly because of it’s complexity, it’s not a simple task to change something here, which is why it’s likely that we’ll revisit this area post-Brexit when there’s more certainty on this area of VAT.
We certainly take your feedback on board, and will post any updates on the forum.
@QFMathew even if you can’t change what those tickboxes do, would you consider changing how they are labelled? Currently someone ticking the “apply reverse charge” checkbox on a purchase would quite reasonably expect that to apply the reverse charge rules, but it doesn’t - it applies the goods rules instead. In HMRC documentation the term “reverse charge” only ever applies to services, not goods, so the current label is at best inaccurate and at worst misleading.
Something like “treat as EC acquisition” would be a better wording.
Any movement on this? With the construction industry domestic reverse charge coming in October there’s going to be even more scope for people to get confused by the current wording…
As far as I can see from the HMRC documentation there’s now at least three different cases where the buyer needs to account for their own VAT:
intra-EC supplies of goods
net in box 8 (dispatches) or 9 (acquisitions), and VAT in box 2 (acquisitions), must be reported on accrual basis in all cases, even if you are otherwise on cash accounting, and dispatches must be reported on ECSL
overseas supplies of services - i.e. “reverse charge”
net in box 6 (both sales and purchases) and VAT in box 1 (purchases only), may be reported on cash basis, sales must be reported on ECSL if the customer is in the EC VAT area but not if they’re outside EC.
domestic reverse charge (mobile phones, computer chips, and soon construction services)
net in box 6 for sales only (not for purchases), VAT in box 1 for purchases only (not for sales, though the amount of VAT due should be shown on sales invoices but not included in the total), always report as accrual basis, no ECSL
QuickFile currently only supports the first of these three, but still calls it “reverse charge” when it isn’t.
