Forum Message

Reverse charge

Hi,

I read a few articles here but I cannot understand something about the reverse charge accounting with Solar Accounts.

I have one invoice only what is a net invoice from an EU supplier and is about a service I got. I paid net 100 pounds for that.
So as per reverse charge I was about to pay the VAT amount what is 20 pounds in my VAT return but Solar Accounts puts the 20 pounds to Box 3 as well like if it was paid already, so it cancels the Box 5 and it shows that I don't need to pay anything.

I should pay otherwise noone pays the VAT and it would be cheating.
What am I missing here?

Please help me on this one.

Thank you very much.


Posted by Tom Kert on Feb 3, 2014 1:52 PM GMT

Hi Tom,

Imagine that you only had one purchase, and it was from a UK supplier. You would pay your supplier the VAT but you would then reclaim the VAT from HMRC on your next VAT return. The net result is that the payments cancel out - your business does not pay VAT (because it has not 'added value'). This is not cheating - it is the way the system is designed.

In a similar way, for EU purchases you pay the VAT to HMRC (instead of your supplier) but immediately reclaim it.

Regards,


Posted by Mark McLaren (Solar Accounts) on Feb 4, 2014 8:33 AM GMT