CIS Domestic Reverse Charge

This is a feature that must be enabled, please contact our support team at Support@khaoscontrolcloud.com if this is a feature you require

021310/022483

Overview

The domestic reverse charge is a VAT procedure that was implemented in the UK on March 1st 2021 for construction services. Under the domestic reverse charge procedure, the buyer (contractor) accounts for the VAT rather than the supplier (subcontractor).

Notes: This development work and will require enabling on clients systems

Configuration

On your system you should now see some new features within the Company Records, Sales Orders/ Purchase Orders and SP Ledger.

Customers and Suppliers can be configured to have the ‘Reverse VAT’ functionality enabled as follows: Customer Record / Main / Options

By default, this is unticked and when ticked the functionality is enabled.

Specification

Customers:

1. An option will be added to company records such that "Reverse VAT" can be enabled per company record.

2. An option has been added to the Sales Order header for "Reverse VAT" which can control reverse VAT on the orders. If the company record is enabled for reverse VAT, the user can override this on

the Sales Order by turning it off. When this option is enabled, all VAT within the order will be removed and shown within the invoice to the customer as: Reverse charge: Customer to pay the VAT to HMRC (and the value of the VAT stated).

3. Any credit notes which are raised against an order with Reverse VAT enabled, will need to also omit VAT and the credit note document should read: Reverse charge: Customer to account for output adjustment vat to HMRC (Value of VAT stated).

The amount of Reverse VAT for customers, does not need to be recorded on the VAT Return.

Suppliers:

1 - An option will be added to company records such that "Reverse VAT" could be enabled per Supplier company record.

2 - The VAT calculations on purchase orders will be omitted and the purchase order will state: Reverse charge: Customer to pay vat to HMRC (Value of vat inserted).

3 - SP Ledger postings will be amended to include a Reverse VAT option, which is driven automatically by the option on the supplier record. When the posting has been done, the SP ledger entry should reflect the reverse VAT, this should be shown within a "Reverse VAT Total" column on the SP Ledger screen. This should also be included on the SP Printings

4 - The Reverse VAT will be accrued for suppliers and entered onto the VAT return, quarterly. The “Reverse VAT” value would need to be entered in Box 1 output tax and Box 4 input tax of the VAT Return. This would then be included in the digital VAT return posting via MTD

Usage

Sales Order Usage:

An line has been added to the Sales Order header for "Reverse VAT Total" which will show reverse VAT on the orders.

When this option is enabled, all VAT within the order will be removed and shown within the invoice to the customer as: Reverse charge: Customer to pay the VAT to HMRC (and the value of the VAT stated).

Any credit notes which are raised against an order with Reverse VAT enabled, will need to also omit VAT and the credit note document should read: Reverse charge: Customer to account for output adjustment vat to HMRC (Value of VAT stated).

The amount of Reverse VAT for customers, does not need to be recorded on the VAT Return.

Purchase Order Usage:

The VAT calculations on purchase orders will be omitted and the purchase order will state: Reverse charge: Customer to pay vat to HMRC (Value of vat inserted).

SP Ledger Usage:

SP Ledger postings will be amended to include a Reverse VAT option, which is driven automatically by the option on the supplier record. When the posting has been done, the SP ledger entry should reflect the reverse VAT, this should be shown within a "Reverse VAT Total" column on the SP Ledger screen. This should also be included on the SP Printings.

VAT Return Usage:

The Reverse VAT will be accrued for suppliers and entered onto the VAT return, quarterly. The “Reverse VAT” value would need to be entered in Box 1 output tax and Box 4 input tax of the VAT Return. This would then be included in the digital VAT return posting via MTD