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Reverse Charge VAT on Purchases - VAT Return Error

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Posted on by DaveHorsley

Hello,

For purchases from Europe (we're in UK) - we're selecting the reverse charge option for the VAT treatment.

In our Purchase Tax Control account we can see the purchase including VAT flowing in and out of the control account.

However in our VAT report and consequently our VAT return we are only seeing the VAT being reclaimed on purchases. The VAT report is not picking up the opposite side of the reverse charge (i.e. we are incorrectly reclaiming VAT when the impact of the transaction should be net zero).

Does anyone have any insight into what is needed to fix it? Is there something that needs amending in the set up?

Many thanks in advance,
David

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Gavin 2,508 on at

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Hi,

We tend to setup reverse charge as per below:

In the VAT Posting Setup the combination is set to "Reverse Charge"

Then when posting a transaction the GLs are in and out of the VAT control:

And the VAT Entry is marked as reverse charge. (this is important for when you run the Calc and Close VAT Statement)

We then configure the VAT statement as per below so the combination hits below Box 1 and Box 4

Hope this helps

Thanks

Gavin

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DaveHorsley 20 on at

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That's great, thank you so much Gavin!

Will be sure to check out your blog.

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