VAT Return

Hi Paul, Many thanks for your response. My apologies regarding the incorrect wording of the VAT notice. The invoice that is causing us the issue is from a supplier in the UAE where the service is for “management system documentation development”. Our accountant believes, based on VAT notice posted, that because the supply of service has taken place in the UAE then it is not subject to the reverse charge. Again thank you, this one has caused us a great deal of headaches as we have never dealt with the reverse charge outside the EU.

Hi Michelle - in this particular topic, the link John has provided above is not a guide, it states the law.

The general rule is that, in cross border "business to business" transactions the place of supply is where the purchaser belongs and so if you, as the purchaser, belong in the UK, the supply is deemed to have taken place within the scope of UK VAT and the reverse charge process kicks in, with the purchaser recording both the sale (boxes 1 & 6) and purchase (boxes 4 & 7).

As stated in section 5 of the guide: "The reverse charge applies to almost all B2B supplies of services except exempt supplies" but if you, or your accountant, believe that a specific exemption can be applied to this general rule, then you need to find it in the legislation and, as you suggest, just record it as a general input in box 7 of your VAT return (use UK purchase with 0% VAT).

Hi there, We still believe that the invoice in question should not be subject to the reverse charge as per the guidelines - It only applies where services are supplied in the UK by a supplier belonging overseas. This makes it outside of the scope. However, I still need it to appear in box 7 as it is an 'Out of the scope' of VAT purchase that is considered as a SUPPLY to the business. Is there any way clear books can do this or am I going to have to produce the VAT return manually? Thanks

Hi Michelle,

I just confirmed with our support accountant and she has confirmed that services for from suppliers outside the EU has to be shown in boxes 1, 4, 6 & 7.

She sent me a link to the ruling on this by HMRC - are you able to check this over with your accountant?

https://www.gov.uk/guidance/vat-imports-acquisitions-and-purchases-from-abroad#services-received-from-overseas-suppliers

I want the total figure to be in box 7 of my VAT return as advised by our accountant, the system should really only reverse charge it if requested. It is causing a but of problem for our accountant as the details on our HMRC Vat return will differ from our one clearbooks generates. If I zero rate the the invoice you reverse charge it but if I put it as "outside the scope" then it is excluded from the return all together. I'm very confused as to what to do for the best??

No sorry - the VAT treatment triggers the reverse charge and the rule is applied as per HMRC guidelines. Is there a reason you don't want this applied? I can consult our support accountant if needed.

Thank you, but what if i don;t want the reverse charge applied? Is there any way to stop this? Thanks

Hi Michelle,

The reverse charge is indeed being applied to these bills - it should show in box 1 and 4, the difference being 0 in box 5.