Domestic Reverse Charge VAT Quesions

Advise on Sage tax coding

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We are a main contractor on a new build project, which on the whole is VAT exempt apart from a few subcontractors who are CIS and VAT registered so will fall under the new DRC VAT rule.  One such supplier is a kitchen supplier who charges VAT on white goods.  we as a contractor cannot reclaim this VAT.  Under the new ruling we will now pay the VAT to HMRC instead of the supplier.  If (as advised) i use the new T21 coding in sage - this will pay the VAT to the HMRC but on the same return it will also reclaim the VAT - but we cannot claim it back - any suggestions on what code I now use?

Replies (14)

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By Paul Crowley
11th May 2021 13:17

Are you the end user?
Have you advised your subcontractors that you are the end user?
It there a contractor that you are the subcontractor to?

What exempt supplies are you making?
DIY or do you have an accountant?

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Replying to Paul Crowley:
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By ashling33
11th May 2021 14:09

No, we are not the end user - we are the main contractor working for the end user

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Replying to ashling33:
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By Paul Crowley
11th May 2021 14:15

So there is a CIS registered contractor above you in the chain?

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Replying to Paul Crowley:
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By ashling33
11th May 2021 14:30

No the client is not CIS registered. We are the main contractor on a JCT contract

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By Paul Crowley
11th May 2021 13:26

Take proper advice.
Kitchen supplier registered as a subcontractor?

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Replying to Paul Crowley:
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By ashling33
11th May 2021 14:07

Yes, as they both supply and fit the kitchens - they are registered with CIS and are VAT registered.

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By Paul Crowley
11th May 2021 14:25

https://www.bdo.co.uk/en-gb/insights/tax/vat-and-indirect-taxes/domestic...

Not an easy to follow explanation, but good enough.
next person up needs to be registered for VAT and registered CIS for next person up to be the possible end user
If they are the end user they should confirm end user status to you

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By SXGuy
11th May 2021 15:09

My advice would be to first work out the trail of people and their status, work out the vat from that then worry about the sage code.

To many people rely on sage tax codes for the answer without understanding what comes before it.

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Replying to SXGuy:
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By ashling33
11th May 2021 15:14

I do understand the trail? we are not the end user therefore the new Domestic Reverse Charge VAT applies to us as a contractor. My question was regarding the new code if the T21 now replaces T1 - therefore you are both paying the reclaiming the VAT on your return - what code is to be used when you need to pay the VAT but NOT reclaim it? or is it just a manual adjustment?

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Replying to ashling33:
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By Paul Crowley
11th May 2021 15:24

See my 15.20 posting
If you are end user, Subcontractors charge VAT

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Replying to Paul Crowley:
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By doubletrouble
11th May 2021 15:42

But they are not the end user

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Replying to SXGuy:
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By Paul Crowley
11th May 2021 15:21

+1

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By VATs-enough
12th May 2021 18:52

ashling33 wrote:

One such supplier is a kitchen supplier who charges VAT on white goods.  we as a contractor cannot reclaim this VAT. 

Why not ? Contractors can claim VAT on building materials and non-building materials. Or are you a developer ?

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