I have been trying to find out how to account for reverse charge VAT in the VAT return for a CIS business registered under a flat rate scheme. I attended a webinar in March this year about it and ask this question. Their answer was 'The flat rate scheme doesn't apply to supplies subject to the reverse charge'. However, I spoke with a couple of other accountants who believe that irrespective of what scheme they are, reverse charge is applicable for any VAT registered CIS business. My confusion is how the reverse charge mechanism fits in a flat rate scheme. If they charge their customer 20% VAT and the customer pays them net, what is the point of staying in a flat rate scheme? At the same time if they receive an invoice from a standard rated subcontractor, how are they going to pay that VAT to HMRC through their VAT return. There is no guidance by HMRC about this situation at all. Some advice would be greatly appreciated.
30th Jul 2021
Reverse charge VAT for CIS
Flat rate scheme and Reverse charge VAT
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