Reverse charge vs. EC aquisitons

[lambooni]

Can anyone please explain the difference between reverse charge and EC aquisitions?

I use Xero and if I use the reverse charge VAT amount box 1 changes. If I use EC aquisitions then VAT box 2 changes along with adding the amount into box 9 also.

The resultant amount of VAT due is the same either way.

I am mainly trying to understand what the fundamental differnece is between the two charges and also in relation to Ebay and Amazon fees, which one I should be using. I think I know (from reading forums) that both are reverse charge rather than EC aquisition but a this point I dont really know the reason why.

Many thanks for your help

 

[Jackie0802]

Sounds right. I don't use Xero, but basically the entry into box 9 is for net EC aquisitions (purchases), the vat input will go to box 4 and the entry into box 1 is the reversing charge.

 

[lambooni]

Xero is using these boxes correctly, I have no issues with that. I just would like to know in what situations I would use reverse charge and in what situations I would use EC aquisitions. The resultant tax bill is identical but the boxes used to get there are different.

Thanks again.

 

[Jackie0802]

They are tied in together. If you are vat registered and purchase goods from any business within the EU but outside of the UK they are referred to as EC acquisitions on the vat form and the net value goes in to box 9 as well as box 7. The 'reversing charge' is the vat treatment used when accounting for the vat. Your supplier won't charge you the vat but he likewise has to account for it as a reversing charge on his vat return in box 8. Are you buying goods from the EU and having them imported into the UK?

 

[lambooni]

Xero seems to use them in different ways. You can select reverse charge (20%) and this adjusts box 1. Using EC aquisitions populates box 2. The result is the same but I cant help thinking they are to be used in different situations. Could reverse charge be used for imports from outside of the EU maybe?

 

[GraemeL]

For VAT, aquisitions are treated differently to services. I think you are assuming they have the same treatment. Here are worked examples that show the differences http://www.taxation.co.uk/taxation/Articles/2010/03/03/258931/reversing-charge

G

 

[Jackie0802]

No, Imports from outside EU is outside of the scope of vat. I'm not really sure what other situation you might think would apply? Can we assume that you are actually buying goods and not just services?

 

[GraemeL]

I think I know (from reading forums) that both are reverse charge rather than EC aquisition but a this point I dont really know the reason why.

An aquisition relates to a product. Google etc are providing a service

 

[lambooni]

Ok so its actually fairly simple then. Acquisitions refers to goods and reverse charge refers to services (within Xero anyway).

Thanks very much for your help

 

[Jackie0802]

The reverse charge applies to both goods and services, but services do not appear in box 8 or 9 on the vat form.