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VAT on services bought from EU

I’ve looked at other posts on this but cannot work out how to make it work in Quickfile.

I am posting a Skype subscription. If I select the reverse charge option, the result is the VAT return includes input tax ( that I haven’t paid). There is no adjustment for the deemed self supply. If I make adjustments in boxes 1 and 6, as suggested on a post I found, the VAT errors when I try to submit.

What is the right treatment?

Hi @Adviseralliance

Have you paid any VAT on this invoice, or does it state that it has to be reverse charged?

If it’s the latter, selecting “Reverse charge on services” will handle this for you in regards to the VAT return.

There’s more information on the different options, here: VAT Options Explained

Mathew

So I have looked at this



Reverse charge on services



Use this option if you have received a service from an overseas supplier and have been asked to self account for VAT.



Box 1: 200
Box 4: 200
Box 6: 1,000
Box 7: 1,000

I selected reverse charge when entering the purchase. When I ran the VAT return, Boxes 4 and 7 were fine. No entry for this transaction appeared in Box 1 or 6.

I tried to enter adjustments to the return. But when I tried to submit, it returned an error saying Quickfile will get back to me. No idea when.

R

Paul

But did you pay vat on the invoice, and does it state reverse charge applies.

This is the crucial bit of info lacking an answer. It would be unwise to advise any further until this is answered.

Paul
No I didn’t pay VAT on it. It doesn’t state it specifically no.

This is the bit I don’t understand. If I provide services to businesses in the EU, I believe it is a zero rated supply. So I wouldn’t charging them VAT. Is it the same?

This is the guidance on the Government website. It doesn’t say anything about whether I’m charged VAT or specifically asked to account for VAT in a specific way.

VAT on services from abroad

If your business buys services from outside the UK a rule called the ‘reverse charge’ applies.

1. Convert the value of the services into sterling.
2. Calculate the amount of VAT due and include this in your VAT Return.
3. Credit your VAT account with the amount of VAT due (as if you had supplied the services).
4. Debit your VAT account with the amount of VAT due.

**This means there will be no tax for you to pay, …

I’m confused

Basically you have to include vat as though it would have been charged and then create an adjustment to reverse it on the vat return

Selecting the reverse charge box should do this automatically for you.

That’s what I thought. But it seems to do only half of what’s needed.

In the purchase editor, it should look something like this. If you’ve set the VAT and checked the “Reverse charge on services” option it should post to boxes 1,4,6 and 7 on your return.

Yes so I understand. But it doesn’t. Odd.
Any thoughts anyone?

I am about to switch to MTD. Might that be the answer?

Ah yes that would be a reason. Unfortunately the new VAT codes aren’t supported on the old VAT form and would need to be manually adjusted. We’ll try to make this clearer.

The old VAT form is due to be retired next week as HMRC close down the gateway.

Thanks. It all makes sense now.
I’ll wait until my MTD application has been processed and will try again

Thanks

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