Reverse charge - B2B purchase of goods under £135 in value, goods are outside the UK at the point of purchase

[Ola_P]

Hello, I’d like to ask if there is a way for me to mark a purchase invoice for supplies bought from an supplier that’s outside the UK, as Reverse Charged?

I’m asking about the situation like the one described in Changes to VAT treatment of overseas goods sold to customers from 1 January 2021

For goods sent from overseas and sold directly to UK consumers without OMP involvement, the overseas seller will be required to register and account for the VAT to HMRC.

Business to business sales not exceeding £135 in value will also be subject to the new rules. However, where the business customer is VAT registered in the UK and provides its valid VAT registration number to the seller, the VAT will be accounted for by the customer by means of a reverse charge.

I know there is an option to Reverse Charge the invoice for services, but I don’t know how to proceed with an invoice for supplies

Should I check the “RC on services” option, or do it some other way?

Thank you in advance for any help!

[tristan]

I have the same question.

The only box I can tick is “reverse charge on SERVICES”, but for GOODS we bought from an EU supplier as we are a vat-registered business in UK, and the goods are under £135, surely we should be able to reverse charge account for the VAT?

[ian_roberts]

The government guidance doesn’t specify it in detail, all they say is

Where the UK VAT registered business provides the OMP or direct seller with its VAT registration number, the responsibility to account for VAT will switch to the UK VAT registered business customer, who will account for it by means of a reverse charge procedure [my bold]. So the OMP or direct seller will not be liable to account for the VAT in these circumstances.

The OMP or direct seller must add a note to the invoice it issues to the UK business customer to make clear that the customer needs to account for VAT. The OMP or direct seller should include a reference to ‘reverse charge’ on the invoice, for example, ‘reverse charge: customer to account for VAT to HMRC’.

The VAT registered business will account for the VAT on their VAT return and will be able to recover that VAT as input tax, subject to normal VAT recovery rules, on the same VAT return.

Nowhere do they specify exactly which “reverse charge procedure” they are referring to - there are two distinct types of “reverse charge” defined by HMRC, one for B2B purchases of services from overseas (VAT in boxes 1 & 4, net in 6 & 7) and the other for domestic supplies of computer chips, mobile phones, wholesale gas & electricity, telecoms services, and the construction industry (VAT in boxes 1 & 4, net in box 7 only, not in box 6).

Imports of goods under £135 seem closer in spirit to the first option (mainly because they always refer to the second as the “domestic reverse charge”), but postponed accounting for consignments over £135 has the same VAT return effects as the second option…

[ian_roberts]

Thinking on this a bit further I’m definitely edging towards the “services” treatment as being the correct one. This is because in all the “option 2” cases there is another UK supplier somewhere who has put the net in box 6 on their return, but this isn’t the case for imports. Basically, every reverse charge transaction ends up in all four boxes 1, 4, 6 and 7 somewhere¹:

Type	Who declares VAT in box 1	Who declares net in box 6
Services from overseas	Purchaser	Purchaser
Domestic RC for chips/phones/etc	Purchaser	Seller
Domestic RC for construction	Purchaser	Seller
Import under £135	Purchaser	?

and for the imports case the only option for the ? is you, the purchaser, as there’s no UK VAT registered seller in a position to do so.

But like I say, this is all speculation on my part, I’ve not seen any official guidance from the government one way or the other.

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¹ Modulo any partial exemption complications etc.