Reverse Charge VAT - Sage (v12)

[loachey]

Sage version 12 doesn't have the T20 VAT code configured for reverse charges. So I am struggling to work out how to do it. My understanding is that I have to treat the purchase as a sale as well.

Here's where I am at:

Raise a purchase invoice with a T8 as it is a purhcase from the EC. This puts it in Box 4, 7 and 9 on my VAT return.

Raise a sales invoice with a T8 putting it in box 1, 2 and 8 on the VAT return.

My credit card pays the charge so I can clear off the purchase invoice but how can I clear the sales invoice?

Any advice would be greatly appreciated.

Thank you, Tara

[loachey]

I have just done a little bit more research and I think I might be mistaken in the EC Purchase part of my posting......

For some reason I thought reverse charges related to EC purchases but now I think it relates to the item you purchase not where you purchase it from.

Therefore Google Adwords (Ireland) would be as above as Ireland is in the EC but anything out of EC and reverse chargeable would be T1's?

Is there anyone that can help me?

Also, Istockphoto - invoice says "you might be required to account for the VAT under the reverse charge procedure according to the local VAT rules in your country"???

How do I find out if I do or not?

Thanks, Tara

[Crowy2004]

Are you registered for Sage support, as they would happily assist you with this query?

[loachey]

No, my client who has v12 doesn't have sage support so I can't ask them.

Tara

[Kevin Hall]

Hi Tara

Sage is awful for VAT anyway. As are most accounting programs (which I why I use my own Excel program for clients!). Sage don't have a VAT Tax Point date (different from the invoice date); they have only one of the two Reverse Charges; and their helpline frequently confuse my clients,leaving me to sort out Sage's lack of VAT understanding. You are not alone!

First: the Reverse Charge on purchases of services from non-UK suppliers is not to be included in Box 9 (that is only for goods and the services that were needed to get the goods to the UK).

Second: we usually advise clients to use a T0 code (depends how the T-numbers have been programmed on your Sage) and adjust the inaccurate VAT return carelessly chucked out by Sage for the missing figures. In theory, you should also adjust for VAT Tax Point cut-offs too, as the invoice date cannot be relied on unless almost the same as the VAT Tax Point itself (e.g. beware payments far in advance or invoicing far in advance).

For example: a purchase of £100 of advertising services from Ireland in 2010 would be:

Box 1 £17.50
Box 2 NONE
Box 3 £17.50
Box 4 £17.50 (assuming the business is not making "VAT exempt" supplies)
Box 5 NONE
Box 6 £100
Box 7 £100
Box 8 NONE
Box 9 NONE

So, if you selected T0, Sage (should) probably only put £100 in Box 7; you would have to add (as a separate VAT Workings amendment) £17.50 to Boxes 1, 3 & 4, plus £100 to Box 6. The outcome is VAT neutral, so this should not affect the Company Accounts: T0 should achieve this, if it behaves as stated above.

As for Istockphoto, the rules are complex. In short, you probably should account for a Reverse Charge if the supplier is outside the UK; but there are some exceptions. Details, as always, are needed before authoritative VAT comments can be made.

Hope it helps, but do ask if you need further guidance.

Good luck!