View source for How do I post reverse charges?

== Summary ==
This article explains how to post reverse charges to be included in your VAT return.

== More Information ==

The rules around reverse charging and how post this through your VAT return can be found on [https://www.gov.uk/guidance/how-to-fill-in-and-submit-your-vat-return-vat-notice-70012#para46 HMRC's] website.

Your invoice should be posted through the {{PL}} as usual. Please ensure your supplier is set up correctly for the country they are based in.

== Post a Journal ==
Calculate the VAT on the service charge and post this as a journal through the {{NL}}.

Go to {{Menu|{{NL}}|Journal Entries}}.
* At {{DataPrompt|Entry mode}}, choose {{DataValue|Multiple}}.
* At {{DataPrompt|Date}}, enter a date for the journal.
* Enter a Nominal Centre for Reverse Charge - the journal will contra out so there will be nil effect on the accounts. [[How do I create a nominal code?|Create]] a new centre if you do not have one set up. This could be a P&L - Overhead.
* In the Debit column enter the nett of the service charge or leave this set to 0.00
* Enter a suitable comment e.g. the supplier account and invoice number.
* Select the type of V.A.T. from the drop-down box as {{DataValue|Input}}.
* Select the rate to use from the drop-down box.
* The V.A.T. will be calculated and added on top of the value that you entered. Amend this if incorrect. If you did not enter a Nett amount you should enter the VAT amount as a Debit value (or Credit if you are posting a Credit note).
* Repeat the same Nominal centre on the second line of the journal.
* In the Credit column enter the nett of the service charge.
* Press {{KeyPress|C-F6}} to repeat the same comment.
* Select the type of V.A.T. from the drop-down box as {{DataValue|Output}}.
* Select the rate to use from the drop-down box.
* The V.A.T. will be calculated and added on top of the value that you entered. Amend this if incorrect. If you did not enter a Nett amount you should enter the VAT amount as a Credit value (or Debit if you are posting a Credit note).
* Check the totals on the right of your screen to ensure the journal balances.
* Click {{Button|Done}} and {{Button|Accept}} your journal.

The VAT will be included in boxes 1 and 4 of your VAT return.

== See also ==
* [[Posting journals]]
* [[Posting cashbook entries]]
* [[How do I post a journal with VAT?]]
* [[How do I run the VAT 100 report?]]
* [[How do I create a nominal code?]]

{{KB_Tags|journal, nominal, v.a.t., reverse charge, petty cash, petty, cash, vat, hmrc, vat100, 100}}
{{FAQ}}{{How}}{{KB_NL}}