Could someone explain to me clearly how the reverse charge works? it's quite important and I'm not able to find clear and simple info on the Net.
That's the situation:
I'm a supplier and all my customers are abroad as Europe. I received a purchase order and I raise an invoice to the customer WITHOUT VAT (T0 basically).
So, they receive an invoice with no VAT on goods but they pay the Import VAT on their country and then during their VAT Return they can claim that specific amount of import VAT back.
In this way Governments can avoid frauds.
Could also please tell me where is the law related with this?
HMRC have some very useful guides on their website...look them up using the phrase EC Sales. Care is needed when dealing with this as type of goods and place of supply are ultra important. I'm assuming it's physical product you are dealing with so don't come MOSS rules. Check any customer VAt numbers via VEIS and don't forget to do your EC sales list, coding your invoices appropriately, ie not T0. Gone a blank on what T code it is and not got sage access just now. Look at your VAt defaults. If I remember next time I gave sage open I will update this.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
As I understand it, sales of goods to VAT registered customers in the EU are posted as T4 - and these are what go onto the EC sales list. You will need to set the customer up in Sage with the VAT number etc, otherwise it wont let you post the sales invoice, and, depending on what Sage you are using, you should be able to generate the EC sales list.
If you sell services to a VAT registered customer in the EU, you would use T22.
If you sell to a consumer, rather than a business, you must charge UK VAT and pay it to HMRC.
If you sell to international customers, who are outside the EU, you would use T0.
I think that's right, I havent done it in a while!
As I understand it, sales of goods to VAT registered customers in the EU are posted as T4 - and these are what go onto the EC sales list. You will need to set the customer up in Sage with the VAT number etc, otherwise it wont let you post the sales invoice, and, depending on what Sage you are using, you should be able to generate the EC sales list.
If you sell services to a VAT registered customer in the EU, you would use T22.
If you sell to a consumer, rather than a business, you must charge UK VAT and pay it to HMRC.
If you sell to international customers, who are outside the EU, you would use T0.
I think that's right, I havent done it in a while!
Hi Michelle
Of course you are spot on with the T codes etc.
Boris
Now my PC is working again I can also enclose the following link -
Just to sum up....
under reverse charge procedure purchaser should pay VAT on the sale NOT the seller as normal. In addition, Supplier DON'T charge VAT on invoice, Purchaser should add and pay VAT on his Country.
After that, Purchaser can claim the VAT amount back.
Also, on the invoice the supplier should specify that the Reverse charge is applied ie customer to pay output tax of £x to HMRC.
