Hi, We’ve been paying a monthly fee to OpenAI for ChatGPT - it’s a US company and the invoice makes no mention of VAT. Should I be paying reverse charge VAT for these purchases?
If you would have been charged VAT when buying an equivalent service from a UK based supplier then yes, you should reverse charge. It should be revenue neutral (unless your sales are partially exempt) as you claim back the same amount in purchase vat as you “pay” in reverse charge sales vat.
Thank you. And if, err, ‘someone’ was dopey enough not to have remembered to think about this for purchases made last VAT quarter (already submitted of course), is there a way of fixing that on QuickFile?. Asking for a friend obviously 
I’d have asked ChatGPT 
.
TBH Perplexity is where I go if I have an accounting question.
Here’s what Perplexity had to say:
“If you are a VAT-registered business in the UK and are paying a monthly fee to OpenAI (a US company) for ChatGPT, and the invoice does not mention VAT, you should apply the reverse charge mechanism for these purchases.
This means:
- You must account for UK VAT on the value of the service as both output tax (VAT due) and input tax (VAT reclaimable, if you have the right to deduct) on your VAT return[2][3][5][6][7].
- OpenAI, as a non-UK supplier, is not required to charge UK VAT on B2B digital services; instead, you self-assess the VAT[2][6][7].
- The invoice should ideally state that the reverse charge applies, but even if it does not, the responsibility to apply the reverse charge is yours as the recipient[5].
If you are not VAT-registered, you do not need to account for VAT under the reverse charge mechanism[7].
Sources
[1] Not able to add VAT ID in billing - support team not responding Not able to add VAT ID in billing - support team not responding - Community - OpenAI Developer Community
[2] VAT on cross-border B2B digital services - vatcalc.com VAT on cross-border B2B digital services - vatcalc.com
[3] Reverse Charge Mechanism for Software Subscriptions Explained Reverse Charge Mechanism for Software Subscriptions Explained - Accounting Insights
[4] Chat GPT invoicing using wrong VAT number? | AccountingWEB Chat GPT invoicing using wrong VAT number? | AccountingWEB
[5] EU VAT Reverse Charge – What you Need to Know - Avalara EU VAT Reverse Charge – What you Need to Know | Avalara
[6] Guide to European VAT for B2B digital services sellers - TaxJar Guide to European VAT for B2B digital services sellers - TaxJar
[7] Understanding VAT on Digital Services: In-depth Guide https://www.1d3.com/blog/vat-compliance-for-digital-services
[8] OpenAI to Begin Charging VAT in Kenya - Voice of Nigeria OpenAI to Begin Charging VAT in Kenya – Voice of Nigeria
[9] Manage billing on the ChatGPT Team subscription plan https://help.openai.com/en/articles/8792536-manage-billing-on-the-chatgpt-team-subscription-plan
[10] OpenAI To Enforce 16% VAT On ChatGPT Services - CIO Africa OpenAI To Enforce 16% VAT On ChatGPT Services | CIO Africa
[11] Taiwan VAT and eGUI - OpenAI Help Center https://help.openai.com/en/articles/11173733-taiwan-vat-and-egui
[12] [PDF] The basic EU VAT rules for electronically supplied services … https://taxation-customs.ec.europa.eu/system/files/2016-11/information_microbusinesses_euvat_2015_en.pdf
[13] EU VAT Reverse Charge Guide for Software Sellers - Freemius EU VAT Reverse Charge Guide for Software Sellers
[14] Understanding VAT on Overseas Subscriptions: A Guide for UK … Understanding VAT on Overseas Subscriptions: A Guide for UK-Based Authors - Writers Tax
[15] EU terms of use - OpenAI https://openai.com/policies/eu-terms-of-use/
[16] What is ChatGPT Plus? - OpenAI Help Center https://help.openai.com/en/articles/6950777-what-is-chatgpt-plus
[17] How do I submit a VAT exemption request? - OpenAI Help Center https://help.openai.com/en/articles/7232908-how-do-i-submit-a-vat-exemption-request
[18] OpenAI to Implement 16% VAT on ChatGPT Services in Kenya … OpenAI to Implement 16% VAT on ChatGPT Services in Kenya Starting May 1 - Techspace Africa
[19] ChatGPT’s parent company OpenAI becomes official VAT payer in … ChatGPT’s parent company OpenAI becomes official VAT payer in Uzbekistan
[20] ChatGPT Plus FAQ ChatGPT Plus FAQ
[21] VAT: Digital Services Supplied to the EU and Other Non UK … VAT: Digital Services Supplied to the EU and Other Non UK Jurisdictions - YogaTax
[22] Cross-border VAT rates in Europe - European Union Cross-border VAT rates in Europe - Your Europe
[23] EU Reverse Charge: What Is It And Who Is It For? - Fonoa https://www.fonoa.com/blog/eu-reverse-charge-what-is-it-and-who-is-it-for”
Perplexity again:
“If you’ve already submitted your VAT return for the last quarter and forgot to account for reverse charge VAT on purchases like OpenAI subscriptions, you can’t amend the submitted VAT return directly, but there is a solution.
According to HMRC guidelines, if the error was not deliberate and amounts to less than £10,000 of underpaid VAT, you should correct it in your next VAT return[1][4]. This is the standard procedure since HMRC does not allow the submission of amended VAT returns once they’ve been filed.
In QuickFile specifically, you would:
- Include the correction in your next VAT return
- Make sure you properly document the adjustment for your records
- Tag the relevant transactions correctly for the next period
If you need to see a breakdown of the items in your VAT return, QuickFile allows you to download the calculations in CSV format which can be viewed in Excel[2]. This might be helpful to document what needs to be corrected.
Before making any adjustments in your next return, it’s advisable to produce a schedule of all entries that make up the adjustments to provide backing information for both HMRC and yourself. You can upload this document to QuickFile’s Document Manager for safekeeping[2].
The key thing is not to worry too much - this is a common issue that has a straightforward correction process as long as the error is below the £10,000 threshold.
Sources
[1] Resubmitting a VAT return - Support - QuickFile Resubmitting a VAT return
[2] VAT Returns Guide - QuickFile VAT Returns Guide
[3] Sending a VAT Return - GOV.UK Sending a VAT Return: When to do a VAT Return - GOV.UK
[4] Can I file an amended VAT return? - Knowledgebase Can I file an amended VAT return?
[5] Edit your VAT return details - FreeAgent Support https://support.freeagent.com/hc/en-gb/articles/360021966259-Edit-your-VAT-return-details
[6] Self Assessment tax returns: If you need to change your return Self Assessment tax returns: If you need to change your return - GOV.UK
[7] How to correct VAT errors and make adjustments - Ember How to correct VAT errors and make adjustments
[8] How do I resubmit a return or file an amended return? - TaxCalc https://www.taxcalc.com/kb/863”