VAT rates
To apply reverse charge accounting for VAT, you need to be using Dimensions version 2.43c or above.
For new databases created using Dimensions 2.43c or later, a VAT rate with the code V will have been created for reverse charge accounting.
If you've upgraded or converted to Dimensions 2.43c or later, you need to create a new GB VAT rate for reverse charge accounting. To do this, follow the steps below.
To insert a new rate for reverse charge accounting
Select 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. You might want to use code V so that the rate is easily identified but, if you already have a rate with code V, you can use any unused number or letter.
Enter the % rate. This should be the current standard GB VAT rate.
From the GB VAT menu, select GB VAT then select Reverse Charge.
If required, amend the description.
Click OK.
Sales Order Options
Reverse Charge Goods: Auto-calculate de minimis limit
This option is selected by default. Leaving this selected automates the tracking of the value of order lines for stock or price records that are flagged as Reverse Charge VAT Applies.
After the deduction of discounts, if the net value of these goods is more than the £5000 de minimis limit, the VAT code is automatically changed to a reverse charge VAT type VAT rate, for example, rate code V or any other that you've created.
If you chose to clear this check box, you need to decide for each sales order whether the value of reverse charge VAT products exceeds the £5000 de minimis limit and apply the correct VAT code manually.
Stock and price records
You need to flag any stock and price records that are relevant for reverse charge VAT accounting. These goods include mobile telephones and computer chips.
For further information regarding reverse charge VAT, and legislation updates, refer to the HMRC website.
You can flag stock and price records from with in the records and on the Info window, selecting Reverse Charge VAT Applies.
We recommend you don't flag the stock items until after the legislation comes into force on 1 March 2021.
Customer, prospect and supplier records
If you have customers and suppliers where the transactions are normally subject to reverse charge VAT, to save time you can enter a default reverse charge goods type VAT code as the default VAT code on customer, prospect and supplier records.
Remember:
The use of reverse charge VAT rules and the applicable VAT code relates to transactions between GB VAT registered suppliers and customers only.
The reverse charge VAT rules are product driven and it's better not to enter a Reverse Charge Goods type VAT code as the default VAT code on customer, prospect and supplier records. Instead ensure that the stock and price items are correctly flagged as Reverse Charge VAT Applies.
Transactions
Existing batched transactions
If you edit existing batched transactions for stock items for which you've set the Reverse Charge VAT Applies flag, VAT rules are applied automatically.
Sales - If you're invoicing a reverse charge type item on or after 1 March 2021, you need to apply the reverse charge VAT rules.
Purchases - If users receive an invoice on or after 1st June, then it could contain Reverse Charge VAT even if Reverse Charge VAT did not apply at the time the purchase order was raised.
Purchases
If you purchase goods for which reverse charge VAT accounting is applicable:
Ensure that the VAT Code V is selected for the transaction.
You don't pay the output VAT to the supplier but the invoice received should detail the amount of VAT that should be accounted for on the purchase.
VAT code V will account for the VAT as output VAT for which the you're now responsible.
The VAT is also accounted for as input VAT which the you may be able to recover.
Sales
When selling goods for which reverse charge VAT accounting is applicable:
You should ensure that the VAT Code V is selected for the transaction.
The VAT is shown in the VAT value field of the transaction but isn't added to the gross.
The gross value is the same as the net value of the transaction.
You don't account for or receive the output VAT applicable to the sale.
The net value of the sale is included in Box 6 of the VAT return.
If a reverse charge VAT transaction has been entered incorrectly and an adjustment needs to be made to the VAT element only, you need to reverse the original transaction values sand enter a new transaction. It isn't possible to enter a reverse charge VAT only VAT journal.
Reports
In all reports, any reverse charge VAT is highlighted by being printed with an asterisk * This is explained in the key at the end of the report.
These reports include 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.