Q4 2020 VAT return double counted some reverse charge transactions

I categorized this as bug as I haven’t seen this before, but it may be user-misoperation!

Trying to track down a mis-posting in the sales tax control account, I’ve found that it was created by the Q4 2020 VAT return. Somehow the VAT return included the handful of VAT reverse charges in Box 1, with some of them in Box 2. My understanding would be none should be in Box 1 and all in Box 2.

Now I have an error in the sales tax control account. In that quarter the STCA has 3 credits (one for each invoice we raised) and one debit (created by the VAT journal). The debit is £30 out as it incorrectly included an amount exactly equal to the reverse charge items included in Box 1.

I’m not worried about the £30 extra we seem to have sent to HMRC, but how to reverse it out of the STCA.

Reverse charge transactions should never show in box 2, only box 1. With all the various reverse charges (overseas services, and the new construction industry scheme) the VAT goes in box 1, and for overseas services only the net also goes in box 6. Box 2 was for acquisitions of goods from the EU up to the end of 2020 and since then is only used by businesses in Northern Ireland.

But to complicate matters the acquisitions case used to be triggered in QuickFile by a checkbox wrongly labelled with the words “apply reverse charge”…

Precisely what combination of VAT options do you have ticked on each of these purchases:

  1. is the supplier set as “vat registered in an EU state”?
  2. did you use the “apply reverse charge” box at the top of the purchase editor?
  3. do you have any of the new vat options ticked at the bottom of the purchase editor for “reverse charge on services”, etc?

1 and 2 together used to be the way to record a goods acquisition from an EU supplier up to the end of December, 3 on its own is how you record a reverse charge, I’m not sure what happens if you’ve done 1 and 3 together.

I tried to categorize the 8 reverse charge transactions, but I can’t find a pattern. I can’t see the full details of any of the invoices any more as they’re locked and I can’t edit them. Also I can’t find the “Vat registered in an eu state” setting - but they (mostly) do have VAT numbers.

I always used to use (2) - apply reverse charge, but recently switched to the “new vat options”. I suspect this is where the problem started.

QF670, 671 and 674 - Supplier A - Irish VAT number - purchase shows the purple rev charge services tag - included in boxes 1,2,7 and 9

QF695 - Supplier A again - purchase shows the purple rev charge tag - included in boxes 1 and 7

QF697, 684 and 693 - Supplier B - Irish VAT number - purple reverse charge tag - included in boxes 1 and 7

QF692 - Supplier C - No VAT number - purple reverse charge tag - included in boxes 1 and 7

All the above QFs are included in the VAT liability and “reversed out” of the STCA by the VAT journal (but were never included in the STCA) - hence the STCA is left with a negative balance.

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