Hi,
What is a reverse charge on service
Hi Gary,
Are you talking about the domestic reverse charge which applies to the UK
construction industry? If so, this is a rule which says the customer pays
the VAT directly to HMRC instead of to the supplier.
If you make a sale or purchase where the domestic reverse charge applies,
in the invoice window set the VAT rate to 0% and click More Options > VAT
Treatment > Domestic Reverse Charge Applies.
Hi Mark,
Thanks for getting back to me.
I am talking about fees / commission charged by Amazon when selling goods online.
Kind regards,
Gary
Hi Gary,
OK in that case set the VAT rate to 0% and the VAT Treatment to 'Purchase
of Goods or Services from EU Supplier'. Solar Accounts will automatically
apply the reverse charge rules.
HI Mark,
So, if I paid lets say £100.00 for services to Amazon, that would be including VAT?
Kind regards,
Gary
Hi Gary,
No, with reverse charge you pay the VAT directly to HMRC - the vendor
doesn't collect VAT under the reverse charge rules.
Hi Mark,
Am a bit confused.
So, if I sold something for £200.00 inc VAT, but got charged £100.00 commission for the sale, would I pay VAT on the net sale of £100.00
Kind regards,
Gary
Hi Gary,
In that case you would treat it as two separate transactions: the first
transaction is a sale to your UK customer for £200.00 which would include
20% VAT collected from your customer to be paid to HMRC. In this case the
sales invoice would include 20% VAT and the VAT Treatment should be 'Sale
of goods or services to UK customer'. You would record the sales invoice
payment of £200 deposited into the Cheque Account.
The second transaction is a purchase from Amazon of a service for £100.00
which would not include 20% if they are in the EU and their invoice shows
0% VAT. In this case the purchase invoice would show 0% VAT and the VAT
Treatment should be set to 'Purchase of Goods or services from EU
supplier'. You would record the purchase invoice payment of £100 paid from
the Cheque Account - the net effect on your cheque account of both these
invoice payments would therefore be an increase in the Cheque Account
balance of £100
Hi Mark,
Many thanks for taking time to explain the transactions properly.
Kind regards,
Gary
