Invoicing for VAT Reverse charges for Construction

LIZ LAWSON · ‎January 20, 2021

Hi,

I am a VAT and CIS registered subcontractor and work for a larger contractor. We also use subcontractors that are VAT and CIS registered.

Can someone help with how I will invoice for works completed from 1st March 2021 to ensure that my books are correct, also how I allocate payments made to subcontractors please?

Sorry if this is a bit vague but fairly new to quickbooks

JonpriL · ‎March 12, 2021

Hello @northamptonbrick,

Let me help share how you can use the codes of the new VAT Reverse Charge for CIS invoices in QuickBooks Online.

Normally, you'll have to completely describe the reason why your contractor is accountable for VAT on their invoice. Learn more about the new codes and a few examples you can use with this article: What do I need to add to my invoices?

Additionally, I've also included this reference for a compilation of the most commonly asked questions while working with this new scheme: VAT Reverse Charge For Building and Construction Services (CIS).

If you have any other questions, please let me know in the comments below. I'll be here to lend a hand.

View solution in original post

Ashleigh1 · ‎January 20, 2021

Hello Liz Lawson,

Welcome to the Community page,

We currently have no information on this at the moment, it is still getting looked into soon as we know we will let our customers know.

WESCOT · ‎January 20, 2021

Hi Thanks for this we have the same issue.

AttleboroughBuilder · ‎January 21, 2021

Hi

Glad this is being raised. We use VAT registered sub-contractors. Will QB have everything ready for 1 March so it will correctly allocate the net amount due to a sub-contractor, as it currently does when I put in an invoice with a CIS sub-contractor?

jackie34 · ‎January 28, 2021

I too have this same problem. Hope we can get this sorted soon.

Dave Linnane · ‎February 05, 2021

How is it that QB have no information as yet? This scheme was supposed to be introduced in 2019 !!! QB Have had lots of time to prepare and introduce process to deal with this. In effect from March 1st the software is useless to the construction industry ? correct me if I'm wrong.

Ashleigh1 · ‎February 05, 2021

Hello Dave Linnane,

Thanks for posting on this thread,

Here is some information in regards to the VAT reverse charges https://quickbooks.intuit.com/learn-support/en-uk/help-articles/vat-domestic-reverse-charge-for-buil... , our developers are working on it and soon as we get any more information we will let our customers know.

northamptonbrick · ‎March 12, 2021

Hi

Is there any more info on this please

JonpriL · ‎March 12, 2021

Hello @northamptonbrick,

Let me help share how you can use the codes of the new VAT Reverse Charge for CIS invoices in QuickBooks Online.

Normally, you'll have to completely describe the reason why your contractor is accountable for VAT on their invoice. Learn more about the new codes and a few examples you can use with this article: What do I need to add to my invoices?

Additionally, I've also included this reference for a compilation of the most commonly asked questions while working with this new scheme: VAT Reverse Charge For Building and Construction Services (CIS).

If you have any other questions, please let me know in the comments below. I'll be here to lend a hand.

Orsita · ‎March 18, 2021

I understand that invoices should have reference to the DRC as given on the QB help page.

"

What do I need to add to my invoices?

For invoices and other VAT documents, you need to include the following:

Show all the information required on a VAT invoice (for example, VAT Registration Number, the date of service supplied and total amount due).
Make a note on the invoice that clearly states the domestic reverse charge applies and that the customer is required to account for the VAT due.
Clearly state the exact amount of VAT due under the reverse charge, or the rate of VAT if the VAT amount cannot be shown, but the VAT should not be included in the amount charged to the customer.
Invoices for services subject to the reverse charge must include the reference ‘reverse charge’ according to the VAT regulations 1995.

Here are some examples of approved references that you can use:

VAT Act 1994 Section 55A applies
S55A VATA 94 applies
Customer to pay the VAT to HMRC

To learn where and how you can add these references to your Sales Forms, check out this article which explains how to customise invoices, estimates and sales receipts."

Can anyone tell me how the amount of reverse charge VAT the client needs to account for can be automatically listed on the sales invoice? I can not see how to add this field to the invoice from the layout info meaning it will have to me manually calculated and written in (leading to errors) when QB could have done this. Both the 20% and reduce 5% rate will frequently need to be used opening up opportunity for error.

Other software packages have hadled this much more smoothly. QB is loosing out to Xero in particular.

jamespaul · ‎March 18, 2021

Hello, Orsita.

I'll give some information on the current step-by-step process when handling VAT reverse charges.

Currently, adding the reverse charges on a sales invoice is done manually. A workaround is to use a recurring invoice template. This can work perfectly if your client's transactions rarely change over time.

Although, you'll still have the opportunity to tweak or change your invoices as they are created.

To create a template:

Click the Gear icon, then select Recurring transactions.
Click the New button, then choose Invoice as the Transaction Type.
Add the details of the invoice with the needed VAT documentation.
Once done, click Save template.

If you need more guides on utilising the recurring transactions for the reverse charges, you can check this article: Create recurring transactions in QuickBooks Online.

I would agree that automation would lessen errors whenever you're creating the sales invoices with the reverse charges. Our developers might add an automatic processing for this in the future.

You can sign up for our newsletter updates here: https://quickbooks.intuit.com/uk/blog/.

If you need some help with other processes in QuickBooks Online, you're welcome to browse other articles in our help resources page.

I'm willing to listen to your thoughts if you have concerns regarding QuickBooks. I'm here to address them accordingly.

RAS123 · ‎March 26, 2021

Please can I jump in here. As a sub-contractor, I've set up the contractor as CIS in accounts and settings, so the invoice correctly defaults to a CIS invoice for this client in QBO. This doesn't seem to happen if the invoice is raised from within the QB app. Equally once the original invoice is created on QBO, you still can't edit that invoice from within the app either - message comes up 'this transaction contains details you can only edit in QBO on the web..... '

Why is this the case please?

MadelynC · ‎March 26, 2021

I’ve got you covered, @RAS123.

Let me share information on why you’re unable to modify the CIS invoices on the QuickBooks app.

When dealing with CIS transactions like invoices, you’ll want to do it using the web since some features aren’t in the app.

The Community recognizes feedback and product suggestions to make the program better. I’ll take note of this idea personally to help improve your experience. I recommend visiting our QuickBooks blog site, where the latest news, features updates, and future enhancements are posted.

In case you need more tips and information on how to manage your account and business finances. We have available resources, webinars, and training videos on the support page. This helps you understand our product features, functions, and benefits of QuickBooks.

Don’t hesitate to let me know if you have other concerns or QuickBooks questions. I’m always here to help you out. Take care and have a good day!

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Invoicing for VAT Reverse charges for Construction