I have just bought a digital software package from Califonia for $199. At the checkout it added VAT, because i was from England, but i only paid $199 (£156.12 was debited) How do i enter this in QuickFile. Is this the same as Europe with the reverse charge accounting.
My understanding (I’m not an accountant) is that when an overseas supplier makes a B2B sale of digitally-downloaded software to a VAT registered UK business then it’s treated as a supply of services for VAT purposes and the purchaser (you) needs to account for the VAT using the reverse charge. If it were physical software being shipped to you on DVD from the US then you’d pay the VAT on the import when it crosses the border and then reclaim it later using the documentation you receive from customs.
Note that the “apply reverse charge” checkbox in QuickFile doesn’t actually apply the reverse charge, instead it applies the rules for purchases of goods (not services) from the EU which are slightly different - if you use this checkbox in QuickFile then you would need to configure the supplier as “VAT registered in another EU member state” (even though they aren’t) in order to enable the checkbox, and enter the purchase as $199 net plus 20% VAT. Ticking the box will then deduct the added VAT leaving the purchase total as $199.
Now since this will use the goods acquisition rules rather than the reverse charge rules, you will need to make a manual adjustment to your next VAT return to subtract the VAT on this purchase from box 2 and add it to box 1, and subtract the net from box 9 and add it to box 6 (which is where the actual reverse charge procedure would have put them).
Thank you so much Ian much appreciated
This topic was automatically closed after 5 days. New replies are no longer allowed.