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VAT Reverse Charge / Postponed VAT

This could be a Feature request, or Support question.

From the 1st of January, the Reverse Charge used by Quickfile will mostly disappear. Quickfile is not geared up for the proper Reverse Charge entries for services, this was an incorrect description used, but was the VAT treatment for Acquisitions, and will mostly be not needed after the 1st of January. However, we would need the proper Reverse Charge for services, and a new postponed VAT accounting on goods bought from the EU / rest of the world.
Are there any plans by the software to introduce changes, or will this all have to be done by manual adjustments?

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Yes this is indeed something we are working on. We intend to provide support for the relevant postponed accounting adjustments on goods and a way to implement the reverse charge on services. These updates will only be implemented on the MTD VAT return system and will not be supported on the legacy VAT return system (the green form), which is scheduled to be decommission on 8th April.

Thank you for the update on this Glenn.

Just to clarify - Quickfile will support only MTD VAT returns from the 8th of April, 2021? As far as I am aware, MTD VAT returns will be compulsory for all VAT registered entities from April 2022 only (quite possibly for VAT returns quarter ending 30/06/2022 and onwards).

Hi @csaba

The older method of submission (using the non-MTD method within QuickFile) is being decommissioned by HMRC so we wouldn’t be able to support it unfortunately.

This does mean that the only way to submit returns through QuickFile would be through the MTD method, as this is the only one HMRC will support too.

Hmrc are removing the xml based submission on 8th April 2021 which means the only digital submission possible will be by mtd.

That doesn’t mean you can’t still log in to your vat account and manually enter figures. You can until April 22

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Sorry, I am trying to make sure I get this right.

Which non-MTD method did you mean, Matthew? Currently, if there is a non-MTD user, they can prepare their VAT return on Quickfile, lock the period in the software, and make submission to HMRC manually using their Government Gateway account. Looking at your reply, would that mean the above method will not be possible going forward, and we can only get VAT return figures if MTD connection is set up with HMRC?

Another interpretation is, if there is a user doing their bookkeeping on spreadsheet, and using your software only for bridging submission - did you possibly refer to this as being discontinued?

I am not familiar with the legacy submission as a term, it is quite possible that you are talking about another way the submissions can be done, which will be discontinued from coming April.

Apologies, I am not questioning your reasons behind, just want to make sure I know which submissions will be possible in future, as this is an important subject, and I want to make sure we are ready for any upcoming changes regarding this.

Correct, and this will still be possible going forward. The thing that is being decommissioned is the old style pre-MTD online submission system which requires you to enter your government gateway id and password directly into the VAT settings page of QuickFile.

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Thank you for the clarification Ian.

I’ve used the reverse charge on Acquisitions even though I only do reverse charge on services and not Acquisitions. So if you are replacing this with the services one, then it would be great to keep the Acquisitions one running until you have the services up so then it’s a straight swap. Doing the vat editing at the end makes it easier for me then as I just move figures from the Acquisitions part of the vat and put then into the right areas.

It’ll still be necessary to support EC acquisitions in VAT returns right up to at least the end of January 2022 as that’s the submission deadline for the last possible VAT period that could include acquisitions (annual accounting, with a 12 month period running from 1st December 2020 to 30th November 2021, then the return deadline under annual accounting is two months after the period end date). So any support that QuickFile adds for the reverse charge and/or for postponed accounting on imports will have to be in addition to the existing support for EC acquisitions, not instead of.

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Glenn, any idea when PVA will be implemented ?

It has been.

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Any suggestions on how to enter pva vat on usd invoices?

Hi @tc5440

When entering the purchase, you should see the “Postponed accounting rules” option in the VAT section.

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The link in @ian_roberts’ post above may also help.

Thanks all, I had ticked the PVA box but was just concerned about the entry. I think I have figured it out. I have entered the vat on the supplier purchase invoice for the goods for that shipment with a +ve net +20% vat entry and a -ve net 0% vat entry entry to reverse the net value out as we do with EC reverse charge transactions. As the vat is on the combined value of the goods and freight and goods are in USD and freight is in GBP it takes. bit of working out to make sure it is correct and left me unsure where the entry should be. Once I had the Postponed import VAT statement from CDS it made more sense.

To enter purchases that use postponed accounting you do exactly the same as you would previously have done with EC acquisitions up until the end of last year - enter the amount the supplier charges you as the net, set the VAT rate to the appropriate UK rate for the items being supplied (probably 20% unless you’re importing food or children’s clothes), and then tick the postponed accounting box. Ticking the box will automatically reverse out the VAT element, leaving the invoice total equal to just the net you were charged by the supplier in the first place, and will do the right things on the VAT return - you don’t need to reverse out the net unless you’re doing it to make an adjustment when your postponed VAT statement doesn’t agree with the amount of VAT that QuickFile calculated.

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Thanks Ian, the vat charge from UPS is based on invoice plus freight plus vat adjustment so the figure is not even close to the actual invoice amount. Also the invoice is in USD so I have to use the PVA report for vat and convert to USD at the rate UPS used and then calculate the equivalent net value to enter the vat and then reverse it out at 0% vat. Not that quick and easy but it works.

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