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VAT Reverse Charge Procedure

tillyjbctillyjbc Feels At HomeRegistered Posts: 46
Does anyone have much experience in dealing with reverse charge procedure for VAT treatment? The design agency I work for has monthly software subscriptions from the US (invoices state customer to account for VAT). I understand making the VAT position neutral ie. boxes 1 and 4 of VAT return. But you also have to include full value (the gross amount?)in boxes 6 and 7 - why, this doesn't make sense, particularly box 6, we're not making a sale. If there is anyone who understands this process and could explain, I would be most grateful!!


  • Gem7321Gem7321 Experienced Mentor DevonMAAT, AAT Licensed Accountant Posts: 1,438
    I also find reverse charge frustrating and I think it's important to avoid over-complicating it. You've hit the nail on the head in that you're making a VAT neutral position. But if you have entries in box 1 and box 4 you need corresponding entries in box 6 and 7.
  • tillyjbctillyjbc Feels At Home Registered Posts: 46
    Thanks Gem, I think you're right, I'm over-complicating something that I don't really need to understand so long as I treat it correctly! The net entry is already in box 6 (taken from the purchase ledger) so I guess I must remember to add to box 7 too? Do you use software that you can make the adjustments easily or is it a manual process?
  • Gem7321Gem7321 Experienced Mentor DevonMAAT, AAT Licensed Accountant Posts: 1,438
    I make the adjustment manually, we use sage 50 and there is a tax code for reverse charge (in the T20 region?) but I'm not familiar enough with other software to know I'm afraid. Good luck!
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