VAT rates
To apply reverse charge accounting for VAT, you need Dimensions version 2.43c or above.
For new databases created in Dimensions 2.43c or later, a VAT rate with code V is created automatically for reverse charge accounting.
If you have upgraded or converted to Dimensions 2.43c or later, create a new GB VAT rate for reverse charge accounting using the steps below.
Create a rate for reverse charge accounting
Click VAT Rates.
Click Edit, then click the blank entry at the bottom of the VAT Rates list.
Enter a VAT code for the new entry. Code V is recommended for easy identification, but any unused number or letter can be used.
Enter the percentage rate. This should be the current standard GB VAT rate.
From the GB VAT menu, click GB VAT, then click Reverse Charge.
Amend the description if needed.
Click OK.
Sales order options
The Reverse Charge Goods: Auto-calculate de minimis limit option is selected by default. When enabled, Dimensions automatically tracks the value of order lines for stock or price records flagged as Reverse Charge VAT Applies. If the net value of these goods exceeds the £5,000 de minimis limit (after discounts), the VAT code is automatically changed to a reverse charge VAT rate — for example, code V. If you clear this option, you must decide manually for each sales order whether the value of reverse charge VAT products exceeds the £5,000 limit and apply the correct VAT code yourself.
Stock and price records
Flag any stock and price records relevant to reverse charge VAT accounting. These goods include mobile telephones and computer chips. For further information and legislation updates, see the HMRC website. You can flag records within the record itself and on the Info window by selecting Reverse Charge VAT Applies.
Customer, prospect, and supplier records
If transactions with particular customers or suppliers are normally subject to reverse charge VAT, you can set a default reverse charge VAT code on those records to save time. Note the following:
Reverse charge VAT rules apply only to transactions between GB VAT-registered suppliers and customers.
Reverse charge VAT rules are product-driven. Rather than setting a default reverse charge VAT code on customer or supplier records, ensure the relevant stock and price items are correctly flagged as Reverse Charge VAT Applies.
Transactions
If you edit existing batched transactions for stock items flagged as Reverse Charge VAT Applies, VAT rules are applied automatically.
Sales: If invoicing a reverse charge item, apply the reverse charge VAT rules.
Purchases: An invoice received may contain reverse charge VAT even if it did not apply when the purchase order was raised.
For purchases where reverse charge VAT applies:
Select VAT code V for the transaction.
You do not pay output VAT to the supplier. The invoice should detail the VAT amount to account for.
VAT code V accounts for the VAT as output VAT, for which you are now responsible.
The VAT is also accounted for as input VAT, which you may be able to recover.
For sales where reverse charge VAT applies:
Select VAT code V for the transaction.
VAT is shown in the VAT value field but is not added to the gross amount.
The gross value equals the net value of the transaction.
You do not account for or receive the output VAT on the sale.
The net value of the sale is included in Box 6 of the VAT return.
If a reverse charge VAT transaction was entered incorrectly and only the VAT element needs adjusting, reverse the original transaction and enter a new one. It is not possible to post a reverse charge VAT-only journal.
Reports
In all reports, reverse charge VAT entries are marked with an asterisk (*), explained in the key at the end of the report. This applies to the Sales and Purchase Ledger Audit reports, Not Yet Printed reports, Current Batch and Current Period reports, All Transactions, and the Fast and Wide reports.