I am using QuickBooks online. I am CIS registered and VAT registered and have already activated everything. I am using the cash accounting scheme.
I have created an Invoice which is subjected to the domestic reverse charge to a CIS customer.
I know I now have to account for the Invoice as if I am on the standard accounting scheme i.e.: account for the sale and vat when the invoice is issued, as opposed to the cash accounting scheme when the payment is actually made.
My question is, when I fill in my VAT report, do I manually have to enter the sale figure in Box 6 or will QuickBooks online adjust this for me automatically and do I have to manually enter the DRC VAT anywhere in the VAT report as well?
What happens when I actually get paid on this Invoice and its already been accounted for at the point of issue? Will I have to manually adjust the VAT report again?
Good day, Lds!
It's great that you're able to activate the codes already.
You don't need to manually enter the sales in the VAT report nor make any adjustments. QuickBooks Online will automatically account for the reverse charge and the VAT will be reflected on your VAT return once the code has been selected and the transaction is saved.
Also, you can always review the following VAT reports before filing your return.
In addition, I suggest checking these links. These will discuss more on how to set up and handle your VAT in QuickBooks Online:
You can always reach out to us here if you have other questions. Have a great one!
Thank you for your reply.
However, the invoice that I have created and saved has not been automatically entered into the Vat report as suggested.
I am still using the cash accounting scheme and don't intend to go over to the standard scheme. I assume if I was on the standard scheme then QBO would automatically allocate the invoice. Is it because I am using the cash accounting scheme QBO doesn't allocate it automatically and I have to enter it manually?
Thanks for getting back to us, Lds.
I suggest reaching out to our customer care support to have this better checked. They have more tools, like screen sharing, that can help you resolve your concern.
Here's how to contact them:
I'd also suggest consulting your accountant for further guidance on your VAT setup. This way, we can ensure your books are accurate in QuickBooks Online (QBO).
Feel free to get back to us if you have any other questions concerning VAT. I'm here to help.
Thank you. I followed your advice and chatted to an online 'help'. Unfortunately, they was of no help at all and kept referring to links to read up about CIS DRC which I have already.
On a previous community thread about this CIS DRC someone mentioned an option....... mark the unpaid Invoice as paid so as it will show up on the VAT report so it will be accounted for as per the standard accounting scheme. Then create a 'holding account' so when the customer actually pays it can be marked off. Has anyone tried this and if so how and where did they create a holding account?
Also on another thread, it was stated by QBO that they are making changes to their VAT return to allow for CIS transactions with the relevant code to be posted to the VAT return at the date of transaction. Obviously, this has not happened yet. Is this going to happen and when will it happen please?
Sorry for all the questions at once.
I’ll handle this for you, @Lds.
You’re correct. QuickBooks Online offers a Holding account to mark the invoice as paid on the date it's raised. Doing this will reduce the account balance when the customer pays the transaction.
To create a Holding account, you can follow the outlined steps below:
I've included these references for a compilation of the most commonly asked questions while working with this new scheme:
You can also check this guide for more insights about the new CIS VAT code and how it will work.
Don’t hesitate to let me know if you have other concerns besides reverse charge VAT. The Community team is always here to help you out. Take care!
Thank you for your advise which has been helpful.
I tried to create a 'holding account' via chart of accounts but quite honestly I did not know what I was doing so I gave up on that but I did what you suggested and marked the CIS DRC Invoice as paid so that it would be accounted for in the VAT report as requested by HMRC under the standard accounting scheme. Instead of this 'holding account' that I could not fathom out how to do, I created a Spreadsheet in Excel to account for any Invoices that fall under the CIS DRC Vat and will keep a check that way when they are accounted for at tax point and when they are actually paid.
Hopefully soon, QBO will have the facility in place where Invoices are automatically allocated if using the DRC on the cash accounting scheme.