Activating the new domestic reverse charge vat

Hi, Ashleigh1

Thank you for your help. It seems to have refreshed nicely now!

Just another question if I may..... Some of my clients are both CIS and VAT registered and the new drc may apply to them,  can I, therefore, have my Invoice template to reflect the new wording needed for the drc for these clients and still have another Invoice template for my other clients?

Hi Lds, that is great to hear, in regards to the invoice and wording you would need to import your own in order to have different messages showing on the invoice templates, as if you just change one message it will change it for all of them so you would need to import one so it doesn't then you just select between them in the invoice customise section which template you want to use and send off to your customers/clients. 

Hi, for a business on the cash VAT scheme, I have used the QB DRC codes 20.0% RC CIS and 5% RC CIS. For invoices that are unpaid at the end of the VAT quarter, they are not showing on the VAT return currently under the accruals basis. Do you know if there is anything I need to do, to get them to pull in correctly?

Hello there, @olliemca.

Allow me to share some details about how your accounting method affects your VAT return.

On a cash basis, those paid invoices will show in the Vat return, you may need to customize or check a separate column to show the unpaid invoices. While in accrual, the vat return amount will show the invoices within the return  date regardless if it's paid or unpaid.

You may want to change your business scheme to the accrual basis so that it the unpaid invoices Vat return will show. I'll show you how to do that:

1. Go to the Settings or Gear icon and click Accounts and Settings.
2. Select the Advanced tab and go to the Accounting section.
3. Click the Edit or Pencil icon and choose Accrual in the Accounting method.
4. Select Save and Done. This is how it looks like:

I've added an article for your future reference that contains FAQs about Vat return: Submit a VAT return in QuickBooks Online.

I'll be here if you have other questions. Please don't hesitate to tag my name in the comment section. Take care!

Hi, ok, so do you have any advice for a business that uses the cash VAT scheme and wants to stay in the cash VAT scheme? For instance, a business does a mixture of work for contractors under CIS and final end customers. They want to stay in the cash scheme, as they still invoice end customers with 20% VAT. When a sales invoice is entered using the RC CIS VAT codes in QuickBooks, it doesn't pull the net balances into the VAT returns, until the invoices are paid. Is there any way to do this correctly in QuickBooks without;

1)Moving to the accrual scheme for VAT 

2) manually marking RC CIS invoices as paid in QuickBooks

It seems they are the only options?

Hi, does anyone have any advice on this? Thanks 

At the moment looks like QBO cannot handle cash basis VAT and DRC. I will probably wait another week or so to see if any updates on the product otherwise will transfer the clients who are affected by this onto Xero, which has been able to deal with this without any issues.

Not sure if this is something QBO is even working on as, anytime you contact support they just forward on the general setting up Cash accounting VAT instructions, without understanding the issue.

Could you please tell me how to activate the new codes.

 Thanks 

Hi there, Nickhu18.

Welcome to the QuickBooks Community. I'll share some steps and details to ensure that you're able to activate the new codes.

You'll have to set up your VAT Centre to manage your VAT process accurately. With this, you can add an additional tax rate so you're able to choose a specific rate in your transactions. Once done, the newly added tax rate will show in the VAT Rates section. Then, ensure that rates and codes are activated from there. To verify this, you'll have to click the Edit VAT drop-down arrow and choose Edit rates. Those codes must appear with the green button that means turned On.

Here's how to set up an additional tax rate:

1. Go to the Taxes menu.
2. Click the Add Tax button.
3. Select the type of tax you want to add. 
4. Fill in the necessary field.
5. Hit Save.

Then, I've attached a screenshot below on how to activate the new rate or codes.

You'll want to run VAT reports to get a glimpse of your taxes. Just navigate through the Taxes page, and then go to the View reports page drop-down.

Additionally, here's an article that you can read to help manage your VAT setup and to see various VAT codes in QuickBooks Online: VAT codes and rates.

Stay in touch with me if there's anything else you need by commenting below. I'm always around to help with your VAT concern in QuickBooks.

Thanks, I’ve managed that but the VAT is still showing that I owe the VAT! Obviously if it is reverse charged then that VAT is paid by who I am invoicing and not by myself, how can I adjust this from my return?

I hope you can help.

Thank you

Thanks for joining us here, Nickhu18.

Once the code has been selected and the transaction is saved, QuickBooks will automatically account for the reverse charge and the VAT will be reflected on your VAT return; you do not need to amend or adjust your return. Here's an article about this for more details: VAT Domestic Reverse Charge for Building and Construction Services.

If the domestic reverse charge is incorrectly shown in your tax return, would suggest reaching out to our chat or phone support teams. They can take a closer look at it to determine why it;s being charge on yourself and not on your customer. Here's how:

1. Click the Help menu in the upper-right hand corner of QBO.
2. Under the QB Assistant tab, type in "talk to a human" and press Enter.
3. Select Contact a human.
4. Choose between Live Chat or Call me back.

Let me also share these articles for additional guidance and reference when tracking VAT in QBO:

• Common VAT Codes
• Learn How QuickBooks Online Calculates VAT

Please don't hesitate to reach out to us again if you have other questions. I'd be glad to jump right back to help you again. 

I have the very same issue today - most of the time I do VAT at 20% but have just won one project where I am a subcontractor and need to reverse charge VAT to the main contractor.  The codes don't seem to work for me and I can't seem to make one that works either - I am a contractor and I am gross payment but that said all my other work is just normal VAT - I also have some sub contractors now invoicing me as reverse charge but they use Xero which seems to work for them.  I have just been entering them as no VAT on my system which I guess is wrong ? 

any help appreciated as I don't want to move to Xero as I am new to Quickbooks having been with Sage for 16 years. 

Thanks for joining the Community space, @TonyWoots. I'm here to help you reverse the charge so you can invoice them correctly.

You'll have to make sure that you choose the correct VAT rate for each transaction. If the VAT rate of the project that you won is not 20%, you can select from your tax rates and reverse them to the main contractor.

It also works the same to some of your sub-contractors just choose the correct VAT rate for them when you process an invoice. In case you need to set up for another tax rate, you can follow the steps below:

1. Go to the Taxes menu.
2. Click the Add Tax button.
3. Choose the type of tax you want to add. 
4. Enter in the necessary field.
5. Click Save.

For more information, see this article: Create a new VAT code in QuickBooks Online.

If the issue persists, I'd recommend contacting our Customer Support Team. They can check the set up of your VAT rates and help you reverse the charge. You can follow the steps shared by my colleague JenoP on how to reach them.

I've also collected these article to help your manage VAT codes and exception reports in QuickBooks:

• VAT codes and rates.
• VAT exceptions and reports in QuickBooks Online

Feel free to click the Reply button if you have additional questions or concerns. I’ll be around to answer them for you. Have a great day ahead.