chartered certified accountants
The VAT domestic reverse charge is coming into force for VAT registered businesses operating within the construction industry from 1 March 2021. Below are links to guidance on how to properly account for the reverse charge on QuickBooks, Xero, Sage and Dext (formerly called Receipt Bank)
Dext (formerly Receipt Bank): https://help.receipt-bank.com/hc/en-us/articles/360006492277-The-Domestic-Reverse-Charge-DRC-in-Receipt-Bank
If you are affected by the VAT domestic reverse charge, and you are currently on the cash accounting scheme for VAT, any invoices issued or received that are subject to the VAT domestic reverse charge should be recorded on your VAT returns on an invoice accounting basis. This means if you remain on the cash accounting scheme you may have to make manual VAT return adjustments each quarter. It may therefore be simpler from an admin point of view to complete your VAT returns on an invoice accounting basis.
If you are a subcontractor whose sales invoices will largely or fully be affected by the new rules you may end up in a consistent VAT return position going forward. If this is the case you may wish to start filing monthly rather than quarterly VAT returns for cashflow purposes.
This information is provided free of charge and in good faith, without acceptance of any future liability arising from any action or in-action by any recipient or reader.Please feel free to share this information as widely as possible and encourage people, who might benefit from these updates, to register at www.asquithand.co.uk for future updates.