How do I process a VAT return that includes a scaffold hire invoice that applied RC vat to it, but I cannot claim the VAT back as its appearing in VAT return details

Thank you for visiting the Community today, gcj1971.

Let me help and route you in the right direction on how to properly handle your invoice and the reverse charge.

QuickBooks will have two new VAT codes (20% and 5%) that customers will be able to use to account for the VAT reverse charge. Once you’ve selected the code and saved the transaction, the online program will automatically account for the reverse charge.

Since you’re unable to claim the tax, I recommend consulting with your accountant for further assistance. They can guide you on how to enter the scaffold hire to the invoice and apply the reverse charge. This also ensures that you can get the VAT back and the details won’t show in the tax return details. 

For more details, you can go over this article: VAT domestic reverse charge for building and construction services. From there, you’ll learn what contractors and sub-contractors have to do. It also outlines the steps on how to find the codes and activate them as well as answers to common questions about the charge. 

This reference tackles how the domestic charge impacts your business: Check when you must use the VAT reverse charge for building and construction services.

Let me know in the comment section below if you have additional questions on how to track the reverse charge in QuickBooks Online (QBO). I’ll be glad to answer them for you. Have a great day ahead.  

Thanks for reply. The reverse charge applies. But as it’s a hire transaction I’m unable to claim VAT back on scaffold hire. But it’s  appearing in my VAT return as a reclaim tax, how do I remove it? 

I appreciate your time getting back, gcj1971.

The nature of your concern requires guidance from an accounting professional. You'll want to reach out to your accountant for advice on how to remove the VAT return that's showing as reclaim. They are experts in making sure VAT is recorded properly.

I suggest visiting this article to learn more about handling VAT reverse charges for scaffolding: Check when you must use the VAT reverse charge for building and construction services.

For your reference with VAT processing in QBO, check our Resource page through this link: VAT for QBO United Kingdom.

Visit us again if you need help or have other questions. It will be my pleasure to help. Stay safe and have a nice day.

The scaffolding company have billed me for hire of scaffolding. Their bill says they have applied RC VAT to it. I think I may have entered the bill on to quickbooks incorrectly. 

If their bill stated:

This invoice:
‐ £995.00 + VAT
Upon Completionon of 1/2 the rear elevations.
Remaining Balance £1000.00 + VAT
£955.00
Domestic Reverse Charge applies
VAT is to be paid at the prevailing rate by the supplier of the service
VAT = £191.00

Net £955.00

Total Due £955.00

I entered onto QB:

Hello Gc1971, 

so having had a look at it for you it looks all correct, you pay your supplier the 955 that has been billed and you pay the VAT in box 1 and reclaim the VAT in box 4, so it nets out at 0 VAT for you. 

The VAT detail report for previous bills from them is showing that I am reclaiming the VAT I have highlighted in red

Bill 4870 Scaffolding Services Ltd       RCPCIS - 20.0  20.00% 1,995.00 399.00 689.25

Bill 4873 Scaffolding Services Ltd       RCPCIS - 20.0   20.00%     340.00 68.00 757.25

would it be to do with default expense category in supplier details? I've also changed the vat code to RC SG 20% but the suppliers vat totals are still showing in reclaim column on VAT Detail report.

My accountant has told me the error is in Quickbooks as it should not be showing as a reclaim. I sent her a snapshot of the Detailed VAT report. Please can this be sorted asap

It’s not showing 0% vat in Detailed Vat report. I need to know why this is happening. If this an error in QB software, I’m hoping previous vat reports from this supplier didn’t have a reclaim for the VAT in the detailed vat reports, as this would mean I owe those sums to HMRC. I tried the chat help yesterday on QB. And they were really helpful until I told them that the rc vat totals for the supplier were being included In detail report as reclaims even though I didn’t pay any Vat as the supplier had applied the RC vat at their end. I was quickly told to sort it with my accountant and HMRC. They confirmed that I had entered the correct vat RC codes. My accountant has seen the vat report and said it’s a QB problem and the VAT should not be showing as reclaim. Can someone from QB please help me sort this problem. The only thing I can do for now is adjust the reclaim total to take out the reclaim RC vat sums for this supplier. These are bills received from them to me. Not invoices I have sent to them. 

Hello, gcj1971.

I'll share additional information about the Reverse Charge.

The VAT should appear under the VAT reclaimed on purchases if you're a contractor and the domestic reverse charge (RC) applied to the services you received. It works as designed. We make sure that our software complies with HMRC (Her Majesty's Revenue and Customs) regulations.

If you're a subcontractor, you'll need to check with your customer or supplier to see if the reverse charge applies to the service you have done.

In the meantime, you can consider adjusting the reclaim total to deduct the reverse charge for that supplier.

Here's how:

1. Go to the Taxes menu, then VAT.
2. Select the Prepare return.
3. In the Box 4 field, click the Adjust link.
4. Make the necessary adjustment.
5. Once done, hit Save.

Check out this article as a reference: Create or delete a VAT adjustment.

I also recommend contacting our QuickBooks Online Support once again. They'll have access to your account and be able to submit a ticket for our engineers to investigate.

Please don't hesitate to reply if you need further assistance with VAT. We're always here to help.

I had a call back from QB, and remote access to my pc. I was assured that although it did look like the amounts were being reclaimed in the detailed report, it was for information purposes only. They told me the amounts reports were correct and I had no need to worry that they weren't. 

Hi @gcj1971 

You still don't sound wholly convinced!

As long as you're using the 20.0% RC CIS VAT code (which shows as RCPCIS-20.0 on the VAT100) - it all works out.

RC SG 20% is definitely not the code to be using here - that's for imported services.

The only change I'd make to the way you've entered into QBO is...

   In VAT column I entered 20% RC as inclusive of Tax

   should be EXCLUSIVE of tax

The end result is the same - so it doesn't actually matter - but you say the invoice states £995.00 PLUS VAT (not including VAT).

OK - now for the explanation.

RC transactions appear twice on the QB VAT Return (box 1 & box 4) which cancel each other out.

---

@gcj1971 wrote:

The VAT detail report for previous bills from them is showing that I am reclaiming the VAT I have highlighted in red

Bill 4870 Scaffolding Services Ltd RCPCIS - 20.0 20.00% 1,995.00 399.00 689.25

Bill 4873 Scaffolding Services Ltd RCPCIS - 20.0 20.00% 340.00 68.00 757.25

---

I think this is from box 1 but if you scan down a bit further, you should see the same amounts in box 4.

Hope this helps.

section of VAT detail report already submitted to HMRC

Box 4 VAT reclaimed on purchases

This is how I entered one of their previous bills onto Quickbooks

I had tried entering it as RCPCIS-20.0 and was getting same result on VAT detail report. A friend of mine who uses QB and a scaffold hire company were using the RC SG code, so I assumed that was the one I needed to use too. I will use the RCPCIS-20.0 on the current bill and see if it makes a difference to the VAT detail report.

This is for a bill already processed and VAT return already submitted to HMRC

Category: CIS GROSS (0%)   Description: Cost,  Amount £1995.00, VAT 20.0% RC SG 

I wish the advisor who logged in remotely had noticed this error. I'm hoping by changing the code back to what you have suggested, it will automatically adjust for next VAT return.

In fairness, the advisor was probably just looking at the mechanics of the VAT Code (that the code used was applying correctly on the VAT Return) - they will usually shy away from advising which VAT Code should or should not be used in a particular case.

I didn't ask her about the code, I asked why the supplier and the VAT amounts were showing up in the VAT reclaim box. She said that it was correct, and the code would let HMRC know it was a reverse charge. I'm considering changing software, to one my accountant uses. Hopefully, they will be able to help me in future.

Total net amount £1950.86

Customer (IE me)  to pay output tax of £390.17 to HMRC

Do I enter this bill on using (20.0% RC CIS) ?

How do I know that quickbooks is claiming this vat payment back ? Can not see the reverse charge on

previous vat returns I have done ?

Do I enter this bill on using (20.0% RC CIS) ?

Yes - that's right, @kbriddon 

How do I know that quickbooks is claiming this vat payment back ? Can not see the reverse charge on previous vat returns I have done ?

You will see the £390.17 on both sides of the VAT Return.  In both Box 1 (VAT due on sales and other outputs) & Box 4 (VAT reclaimed in the period on purchases and other inputs) - so they effectively cancel out.

If you are an End-User (for RC VAT purposes) you should contact the supplier & ask them to re-invoice with standard VAT.

Hope this helps.