I have set up a reverse charge tax code as per the manual, and it looks fine on the tax transactions report, showing the tax amount in both the sales and the purchase side:
However, on my UK VAT calculation worksheet the transaction only shows up as a purchase, but not in box for sales (all my sales are services exports, that’s why a reverse charge VAT should be the only entry in Box 1.
Guidance from the UK tax authority is that the sales element of this has to be included can be found in section 4.6 of this link: How to fill in and submit your VAT Return (VAT Notice 700/12) - GOV.UK
Please note that UK businesses are no longer allowed to simply amend the VAT return by adding the missing figure. Since MTD came in a couple of years back, data needs to be reported exactly as it is reported by the accounting software, which scuppers the easiest way of dealing with this.
Did you read the caution reprinted below from Create and use tax codes | Manager that was linked from Reverse charge VAT (Value Added Tax) | Manager
Caution Taxes from custom tax codes you create are not included in figures computed by localized tax calculation worksheets in the Reports tab. Only predefined tax codes associated with the country for which a worksheet was developed are taken into account. Therefore, if you create any custom tax codes and want to use one of the tax calculation worksheets, you must manually adjust values from the worksheet for all taxes collected or paid under self-created tax codes when filing information with your tax authority.
I had seen this, but this begs the question why do we not have a predefined reverse charge tax code for the UK. Perhaps I have too lofty expectations for the software, but I would expect a localized worksheet to comply with the the local law.
There are of course 2 ways to fix this, either correct the UK tax worksheet to recognize reverse charge codes, or provide a standard reverse charge tax code for the UK.
But in its current form you cannot file VAT returns legally if you buy in services from abroad.
@lubos: Is this really the last word on this? It’s impossible to file a UK VAT return with a reverse charge purchase because the UK VAT worksheet, that was specifically created for UK VAT returns, cannot handle a reverse charge tax code, even though that functionality is available elsewhere in the system?
As I said before, the easiest option (to simply amend the figures) is not allowed under HMRC guidelines - figures MUST be reported as they come out of the accounting software (“digital chain”), and I am not prepared to deal with my taxes on the basis of the 11th commandment (“Thou shalt not be caught”).
So I suppose it’s back to SAGE after all - shame really. I absolutely love the software… but not enough to knowingly break tax law for the privilege to use it.
Localisations are written and maintained by users from each jurisdiction. I’m not sure who is on the team who maintain the UK localisation. However there maybe a pause in localisation development as I think the underlying report writing tools are being updated.