Domestic reverse charge ― accounting requirements

Produced by Tolley
Domestic reverse charge ― accounting requirements

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Domestic reverse charge ― accounting requirements
  • What supplies are always excluded from the scope of the domestic reverse charge?
  • When does the reverse charge apply?
  • Mixed or bundled supplies
  • Invoice requirements
  • VAT return
  • Supplier
  • Customer
  • Non-VAT registered customers
  • VAT adjustments
  • More...

This guidance note provides details of the accounting and invoicing requirements that need to be met by businesses who are required to account for VAT using the reverse charge. For details of the specific requirements for the supplies covered by the reverse charge, please see the following guidance notes:

  1. Domestic reverse charge ― mobile phones and computer chips

  2. Domestic reverse charge ― trading in carbon emissions

  3. Domestic reverse charge ― wholesale trading in electricity and gas

  4. Domestic reverse charge ― wholesale electronic communication services

  5. Domestic reverse charge ― supplies of building and construction services

  6. Domestic reverse charge ― trading in renewable energy certificates

What supplies are always excluded from the scope of the domestic reverse charge?

HMRC has stated that the following supplies are always excluded from the scope of the reverse charge:

  1. supplies to businesses not registered and not liable to be registered for VAT

  2. supplies to customers for non-business use

  3. supplies for final consumption

  4. supplies for which the seller chooses to use the second-hand margin scheme. See the Overview of margin schemes guidance note

  5. cross-border transactions of specified goods and services. See the Reverse charge ― buying in services from outside the UK guidance note

  6. specified goods and services which a business gives away for no consideration, these may be deemed supplies on which the supplier is required to account for VAT. See the Consideration and Business gifts and samples guidance notes

When does the reverse charge apply?

The reverse charge only applies to supplies where:

  1. those supplies are specified supplies of goods or services that are liable to the reverse charge (see above)

  2. the customer is registered or liable to be registered for UK VAT

  3. the customer is buying the goods or services for a business purpose

  4. in the case of mobile phones or computer chips, the VAT exclusive value of any specified goods is above the £5,000 de minimis limit (see the Domestic reverse charge ― mobile phones and computer chips guidance note)

Mixed

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