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VAT reverse charge - sales of services to an EU client, VAT-registered


#1

Hi, just started to use Quickfile, and I think the reverse charge is a bit odd. Well, wrong.

Firstly, for a SALE of services under reverse charge, the only entry on the VAT return should be in the Box 6.

Secondly, entering the other country’s VAT rate (client’s VAT rate) should not be necessary in the case of a reverse charge (as the whole point of reverse charge is that the client has to charge themselves their local VAT). And showing an imaginary VAT amount and the same negative VAT amount on an invoice is confusing at least.

It’s a simple algorithm to implement, with another checkbox to tell whether an item is a service or goods. I have a single-line formula in Excel for each VAT Return Box - I am happy to share that with QuickFile programmers if it helps.

I guess the easiest way around this is selecting a 0% VAT rate? And then manually adjusting the VAT return - if this is possible, I haven’t checked yet. But that manual thing might not be compliant with the MDT (making tax digital).


#2

Hi @sasopuksic

Currently the reverse charging on QuickFile is only applicable to goods and not services. A manual adjustment would be needed for the moment.

Another user on the forum kindly posted this a while back, which may help: VAT Act 1994 Section 55A applies

Thank you for the offer of sharing the formulas from Excel. VAT is a vastly complex area, but it’s likely that this will be reviewed following Brexit.


#3

Thank you Matthew, for the very quick reply.

I stumbled upon another VAT question, and perhaps this is also something not supported, or if you could point me to a solution? It’s about a purchase of a service from a non-EU country from a supplier not registered for VAT in Europe - so, it’s not a goods purchase with import VAT paid upon the physical import and then reclaimed by C79, which is addressed by this post C79: Import VAT / Import Duty / Handling Fees. It’s also not out of scope of VAT. This should go to boxes 6 and 7 (the invoiced amount), but also to boxes 1 and 4 as import VAT needs to be self-charged (and claimed back at the same time).


#4

QuickFile doesn’t currently support the reverse charge at all - it has a checkbox that is labelled “apply reverse charge” but it doesn’t actually do that (which would put the vat in box 1 and the net in box 6), instead it applies the rules for EC acquisitions of goods (vat in box 2 and net in box 9).

What I have done in the past is to tick the “reverse charge” box anyway, then manually adjust my VAT return to move the vat from box 2 to 1 and the net from 9 to 6. This is a VAT-neutral adjustment so it doesn’t affect anything else.