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Adobe pro invoice, Exempt or Reverse Charge VAT?

Adobe pro invoice, Exempt or Reverse Charge VAT?

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Hi All,

I have been receiving Adobe pro invoices for some time now (No VAT), I have always put these on as Exempt. After further inspection of these invoices I can see that It states 'Note: if no tax is charged and your tax identification number is displayed, then this is either an exempt or reverse charge transaction'. Also another note saying 'Reverse charge supply-customer to self assess' It includes both the business vat number GB and Adobe VAT number IE.

Upon reading this I believe maybe I am incorrect to put this as exempt and it should be reverse charge, could someone please confirm this is the case, if so how does one account for reverse charge VAT (Not something I have ever had to do). 

Thank you. 

Replies (6)

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Jason Croke
By Jason Croke
14th Apr 2021 11:56

Adobe = Digital services.

If invoice addressed to a business then will be a reverse charge supply.

If invoiced to you personally (not a business or no VAT number), then it would have VAT charged on the invoice.

It is not an exempt transaction.

If your business is fully taxable (you can reclaim all your input tax) then its not a major crime, don't go back and amend anything but use the right code for reverse charge transactions in your accounting software so that you are doing it the right way, HMRC unlikely to have an issue as no VAT loss, just a matter of putting things in right place.

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By rmillaree
14th Apr 2021 12:03

Adobe are akin to Schrödinger's cat.
they might be reverse charge they might be standard rated and they might be exempt - its not until you "open the box" I.e look at the vat invoices that you will know what the treatment is.

Also its possible that the treatment shown is not correct - if the wrong treatmnet is shown then Adobe can be contacted to see if correction is possible.

In summary Adobe have UK presence and non uk presence and you need to find out which one is billing. Furthermore if its non uk presence you should not presume that reverse charge will have been applied by adobe - something else is posisble.

I don't know if adobe might also do zero rated items but i would say that is also a distinct possibility.

I would presume though this is most likely to be standard rated supply from overseas entity for which the reverse charge applies.

I would recommend going away and looking "recent" up examples of reverse charge and DYOR as its probably best not explained on here when there are specific dfault good explanations on the web.

I would expect though that

Box 1 and 3 contain 20% of value of payment made
Box 4 contains 20% of value of payment made
Box 6 contains value of payment made
Box 7 contains value of payment made

Net vat consequence presuming partial exemption no applicable is nil.

this is off the top of my head and my head is old and severley wounded with brexit changes so could easily be wrong.

i am presuming buisness is vat registered.

don't presume the vat treatmnet for the next payment to adobe will be the same.

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Replying to rmillaree:
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By Accountsman123
14th Apr 2021 12:09

Well on the invoice it states Dublin Ireland with an IE VAT number, so in this case I guess reverse charge does apply?

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Replying to Accountsman123:
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By rmillaree
14th Apr 2021 19:28

Yes - reverse charge for this particular invoice almost certainly - unless the supply itself would be exempt or zero rated if supplied in the uk !!!! - if supply would be zero rated or exempt there is nothing vat wise to reverse charge !!

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Replying to rmillaree:
By jon_griffey
14th Apr 2021 16:41

rmillaree wrote:

In summary Adobe have UK presence and non uk presence and you need to find out which one is billing. Furthermore if its non uk presence you should not presume that reverse charge will have been applied by adobe - something else is posisble.

Its the same for all such companies - Amazon, Godaddy, Microsoft etc, you just don't know how the VAT has been handled unless you open every invoice. It makes it impossible to set rules for your accounting software.

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My photo
By Matrix
14th Apr 2021 21:21

The email from Adobe is called Tax exempted transactions which is probably what is confusing you. This is sent to a business which has provided their VAT number.

The invoice clearly says that it is subject to the reverse charge and includes the customer’s VAT number.

What software are you using? If you search the knowledge base it will tell you what to do.

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