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EU reverse charge VAT

Accounting entries

Hi

This has been covered before I think, though on a few threads, the outcomes appear different. We have an invoice from a software supplier based in RoI. Their invoice has NIL VAT on, and states "reverse charge".

To recognise the expenditure I need to DR Expense / CR Bank, say £500.  So far so easy.

However, I understand the need to notionally account for VAT on the purchase with a DR to VAT control, so a DR of £100 in this example.

QUESTION 1 - is the other side of this journal also to VAT control, CR £100?

QUESTION 2 - how do I account for the fact that VAT on sales will now be £100, with NIL sales - do I notionally adjust the face of the VAT return to "account" for this (non) sale, ensuring Output VAT / Sales = 20%...?

Any advice greatly received.

Thanks - D

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By mg200
16th Apr 2018 17:28

I'm not sure this is considered an accounting entry as it is more VAT reporting. Most bookkeeping software seem to translate this to the VAT return successfully by use a dedicated Reverse Charge tax/VAT code.

What system are you using?

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16th Apr 2018 18:07

Making some assumptions:-
£500 goes into Boxes 6 & 7
£100 goes into Boxes 1 & 4
nothing in box 8 nor 9

so effectively yes to both your questions.

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