Reverse Charge VAT for Services such as Google Adwords, Ebay Amazon

[egs]

After digging around I found this in the “how to” Adwords Reverse Charge VAT which I believe is the correct solution for dealing with Google AdWords as it is a service not a product.
Get’s a bit confusing when articles like this pop up in the community search How to account for Google Adwords using VAT Reverse Charge

Any chance of automating this process for services? For example in modify supplier details have a vat setting “ VAT Registered in another EC Member State (Services)” and for the VAT boxes to be populated correctly automatically.

Thank you

Ed

[QFMathew]

Hi @egs

This is something that will be reviewed in due course. Following Brexit and the expected changes to VAT, we will take a look at this area.

[ian_roberts]

As you’ve discovered, the “reverse charge” checkbox in QuickFile doesn’t - it applies the goods acquisition rules instead. I’ve laid out a possible way to record reverse charge transactions accurately without needing any manual adjustments in another thread

VAT on EU supplies and services

QuickFile does not support the reverse charge. It has a checkbox that’s labelled “apply reverse charge” but what that actually does is to apply the rules for EU acquisitions of goods, not the reverse charge. The way I’ve had to deal with it is to tick the “reverse charge” box anyway and then manually adjust my vat return to move the services vat from box 2 to box 1 and the matching net from box 9 to box 6, but that won’t necessarily work if you’re on cash accounting (acquisitions are always ha…

but it’s quite fiddly. The “adwords reverse charge” post you linked to will do the job if you’re on accrual accounting but it’s not strictly right if you’re on cash accounting, and in these days of MTD it seems better to avoid manual adjustments if at all possible.

[egs]

When you say:

@ian_roberts

The “adwords reverse charge” post you linked to will do the job if you’re on accrual accounting but it’s not strictly right if you’re on cash accounting, and in these days of MTD it seems better to avoid manual adjustments if at all possible.

Do you mean if you’re on accrual accounting (which I am) the vat due is correct which “does the job”?

Boxes 1,2, 6 and 9 will be incorrect. To what extent does this matter? If you have a small reporting error like this which does not impact the VAT due do you know what HMRC’s stance is on this?

[ian_roberts]

That post you linked to does the job because it uses manual adjustments to move the amounts from box 2 to 1 and from box 9 to 6. This is where they need to be for a reverse charge rather than a goods acquisition.

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The “if you’re on accrual accounting” is because acquisitions are always reported on accruals basis even if the rest of your VAT return is on cash basis, but nothing I’ve read suggests that reverse charge transactions for overseas service providers are subject to the same rule. So if you’re on cash accounting then by rights you should declare the RC vat when you paid the supplier rather than when they invoiced you - if the invoice is dated 28th March and you pay on 2nd April then the manual adjustments method technically pays the RC vat in the Jan-Mar return and claims back the purchase in Apr-Jun, rather than the two just cancelling out on the Apr-Jun return. Or vice versa, for something like stripe where they invoice in April for the fees you already paid in March.