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VAT Domestic Reverse Charge

VAT Domestic Reverse Charge and Cash Accounting

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I think I've just about got to grips with the details of new VAT Domestic Reverse Charge which is being implemented as of 1st October 2019, although I'm not too sure about how to implement the changes for clients using the Cash Accounting Scheme. 

The Guidance states that the scheme cannot be used for transactions for which the DRC applies (although the date of payment can be used if it precedes the date of the invoice) but that cash accounting can still be used for all other transactions. Given that MTD for VAT means that VAT registered clients will be using software, surely this means that unless implementing a convoluted Excel workaround, they will have to stop using Cash Accounting altogether as I don't know of any software solutions that can implement both cash and standard VAT accounting at the same time.

I've also just made initial enquiries with the two main software providers that I use, Freeagent and Quickbooks, to see how their systems will accommodate the DRC. Freeagent tell me that there will not be any changes made to the software and that Contractors will  have to post journals to apply the DRC to all relevant transactions. I was told by Quickbooks that they will not be supporting the changes but that a work around would be possible, which I assume would involve similar adjusting journals as no further information was available at this time.

If I've misinterpreted anything then great, maybe it's not as bad as I thought. I welcome any advice or information. Hopefully other users can offer some help with these issues, either by clarifying anything that I have missed regarding the Cash Accounting Scheme or by recommending any suitable software.

Thank you.

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By stepurhan
25th Jun 2019 13:14

Just finished a webinar on the subject.

So many issues arising from this change. I'm thinking of one particular client that struggles dealing with things correctly now. I dread to think what sort of mess will result from this.

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