Domestic Reverse-Charge Taxes
Reverse-charge VAT accounting rules apply to the sale and purchase within the United Kingdom of a specific range of goods such as phones and computer chips.
To set up tax rates to accommodate this requirement:
1 Specify a comment type for zero rates in Global Tax Management Control. In the comment, include text such as Subject to Reverse Charge or other text recommended by regulatory bodies. This comment prints on customer invoices.
2 Create zero percent tax rates in Tax Rate Maintenance specifically for items subject to this tax and select the Domestic Reverse Charge field.
3 Set up item tax classes and usage codes as well as customer tax class and usage codes so the correct zero percent tax rate is used on sales orders, pending invoices, and invoices for items subject to reverse charge.
When you post and print the customer invoices, the system captures details in tax history. Use the Reverse Charge Sales List Report (29.6.3.9) to generate a report for printing or a file in comma-separated values (CSV) format to report monthly tax for rates with Domestic Reverse Charge set to Yes in Tax Rate Maintenance.
Note: A single invoice for sales of less than £5000 of qualifying goods to one VAT registered customer is not subject to the reverse charge rules, but should be charged with standard rate VAT and should not appear on the Reverse Charge Sales List Report. To manage this exclusion, you should set up customer tax class and usage values to reflect the normal trading situation for reverse charge items for each customer. You must then verify that the default usage is correct for each particular invoice before printing and posting.