Reverse Charge for Microsoft Ireland Invoice

c-edwards · ‎April 06, 2022

We have several invoices from Microsoft Ireland that have a VAT section that says 0% VAT - Reverse Charge. This is for digital software/services, Microsoft Azure. We are VAT registered in the UK. These are expenses, i.e. they are not services that we resell.

Presumably we should use 20.0% RC SG VAT code in Quickbooks? What affect does this have on the VAT return, which boxes go up and down and by how much? Does it change the actual amount of VAT we owe?

Over the year it seems that some of these have been entered with zero VAT, and some have been entered with standard 20% VAT with the inclusive price (NOT BY ME!!). Presumably this means we have to record an adjustment on our next VAT return.

GeorgiaC · ‎April 06, 2022

Hi c-edwards, our VAT code guide shows the scenarios in which the default codes would be applied and the specific boxes that these post to on the VAT return. If a code has been entered incorrectly on a transaction that has been filed in QuickBooks, you can edit the transaction to show the correct code and this will automatically create an adjustment (which will appear as an exception) on the open VAT return. If you would prefer to correct this by entering a single adjustment against the return we'd recommend reaching out to your bookkeeper/accountant for assistance with this. :smiling_face_with_smiling_eyes:

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GeorgiaC · ‎April 06, 2022

Hi c-edwards, our VAT code guide shows the scenarios in which the default codes would be applied and the specific boxes that these post to on the VAT return. If a code has been entered incorrectly on a transaction that has been filed in QuickBooks, you can edit the transaction to show the correct code and this will automatically create an adjustment (which will appear as an exception) on the open VAT return. If you would prefer to correct this by entering a single adjustment against the return we'd recommend reaching out to your bookkeeper/accountant for assistance with this. :smiling_face_with_smiling_eyes:

c-edwards · ‎April 06, 2022

Thanks that's really very helpful, and that's what I hoped would happen, I'll correct all the codes on the faulty transactions.

Incidentally the guide you link to says - QuickBooks VAT codes (intuit.com)

"Default reverse charge VAT code for services. Used for goods or services bought from someone in another EU country that are classed as standard rate in the UK."

But since the UK isn't in the EU "another EU country" should be replaced "an EU country".

Similarly the part referring to the EC VAT codes and rates could have a note saying that after the end of the transition period, i.e. beginning 01/01/2022, the EC VAT codes should not be used by UK businesses (apart from (maybe?) in Northern Ireland).

paul72 · ‎April 08, 2022

@c-edwards wrote:
Incidentally the guide you link to says - QuickBooks VAT codes (intuit.com)
"Default reverse charge VAT code for services. Used for goods or services bought from someone in another EU country that are classed as standard rate in the UK."
But since the UK isn't in the EU "another EU country" should be replaced "an EU country".

Actually, this should simply read 'another country' as RC for Services applies (&, as far as I know, has always applied) to the Rest of the World.

Prior to 2021, there was another code for intra-EU Services (20%ECS) which probably had the same effect on the VAT Return.

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Reverse Charge for Microsoft Ireland Invoice