Google Adwords invoice - reverse VAT

[consultant]

I have just seen one of our google adwords invoices.

There is not VAT charged, but a comment:
Services subject to the reverse charge - VAT to be accounted for by the recipient as per Article 196 of Council Directive 2006/112/EC

Does this mean it needs to be accounted for in a different way to normal invoices or cross border transactions?

[elainec100@cheapaccounting]

reverse charge info here:

http://www.hmrc.gov.uk/vat/managing/international/imports/importing.htm#3

and for info here are the changes from 01/01/10

http://www.hmrc.gov.uk/vat/cross-border-changes-2010.htm

[consultant]

Elaine,

Thanks for the pointer.

Is it me, or is this a pointless exercise? I am not being charged VAT by the supplier, but I hve to declare that I have been, only to claim the VAT back again!!

This looks like even more work, as using accounting software (Kashflow), this would need to be managed manually, as adding VAT to the purchase entry will show that we have underpaid google!!

Sheeesh!

[drshadrack]

Some businesses cannot claim VAT back on all their expenditure because they make supplies which are exempt from VAT. When such a business purchases a 'reverse charge' service thay have to, efffectively, charge themselves VAT which is irrecoverable or only partially recoverable.

[DuaneJackson]

This looks like even more work, as using accounting software (Kashflow), this would need to be managed manually, as adding VAT to the purchase entry will show that we have underpaid google!!

If you just tick the box to say the supplier is in another EC state then it should all be taken care of automatically

[consultant]

Duane to the rescue!!!!!!

ta

[RAL]

If you just tick the box to say the supplier is in another EC state then it should all be taken care of automatically

Hi Duane

I am not familier with Kashflow hence I am asking this question. How do you differentiate between services and goods from EU in Kashflow?

[Tom McClelland]

Hi Duane

I am not familier with Kashflow hence I am asking this question. How do you differentiate between services and goods from EU in Kashflow?

That's only relevant for Intrastat, isn't it? Does KashFlow do Intrastat? I would guess that it wouldn't be relevant for the majority of KashFlow users.

[DuaneJackson]

Hi Duane

I am not familier with Kashflow hence I am asking this question. How do you differentiate between services and goods from EU in Kashflow?

It's done at the nominal level. There's a tick box that says "This is a product (as opposed to a service)."

We'll be upgrading this to deal with the ESL changes.

[RAL]

That's only relevant for Intrastat, isn't it? Does KashFlow do Intrastat? I would guess that it wouldn't be relevant for the majority of KashFlow users.


It also relevant for uk vat return too. Goods and Services are reported on to different boxes in vat return.

[Tom McClelland]

It also relevant for uk vat return too. Goods and Services are reported on to different boxes in vat return.

That's curious. You're quite right of course. What has confused me is the subject of the original post which refers to the reverse charge being for Google Adwords. I'm used to reverse charge Google Adwords invoices for 12Pay too, and I'd forgotten that reverse charge applies to goods. Google Adwords strike me as a "service" not "goods".

So now I'm pondering what is going on here? What actually constitutes the difference between goods and services for VAT purposes? Such that Google Adwords is apparently "goods". Baffling (to me at least, till someone comes along and explains it) :|

[RAL]

That's curious. You're quite right of course. What has confused me is the subject of the original post which refers to the reverse charge being for Google Adwords. I'm used to reverse charge Google Adwords invoices for 12Pay too, and I'd forgotten that reverse charge applies to goods. Google Adwords strike me as a "service" not "goods".

So now I'm pondering what is going on here? What actually constitutes the difference between goods and services for VAT purposes? Such that Google Adwords is apparently "goods". Baffling (to me at least, till someone comes along and explains it) :|

My apologies if I create a confusion over services and goods.

As you said Google advowrds is a "service" not "goods". I was referring to the reporting of "reverse charge" of "services" and "goods" on uk vat return.

There are different rules for reporting of "Services" and "Goods" on uk vat return. For example, Goods will be reported on Box, 2, 4, 7 and 9 while services would be reported on Box 1, 4, 6 and 7. Reason I asked the question because Sage do can not deal with the reverse charge of services correctly.