If you have selected HMRC as your VAT authority, then you can select a VAT treatment for a VAT code. There are five treatments you can apply to a VAT code. All these treatment calculations have their own sections in the VAT Detailed Report.
- Standard – all existing codes will have the Standard treatment applied.
- Out of scope – lines that should not affect your VAT return are out of scope. Detail lines with a VAT code that use this treatment will not affect your return.
- Sales of goods to EU – use a code with this treatment if you:
- have sold goods to a customer in an EU member state on or before 31 December 2020, or
- are selling goods from Northern Ireland to a customer in an EU Member State from 1 January 2021.
- HMRC details their rules in their guidance document Exports, dispatches, supplying goods abroad and charging VAT (external link). Sales of goods to the EU are included in both:
- Box 6 (total value of sales and all other outputs excluding any VAT), and
- Box 8 (total value of all supplies of goods and related costs, excluding any VAT, to EU member states: a) made on or before 31 December 2020 & b) from Northern Ireland to EU Member States made from 1 January 2021).
Note: This treatment relates to goods, not services.
- EU acquisitions (purchase of goods from the EU) – EU acquisition tax is the purchase of goods from another company where both parties are VAT registered. This relates to the purchase side of your accounts. HMRC details the rules in their guidance document The single market (VAT Notice 725) (external link). This affects:
- Box 7 (the total value of purchases and all other inputs excluding any VAT);
- Box 9 (total value of all acquisitions of goods and related costs, excluding VAT: a) from EU Member States made on or before 31 December 2020 & b) from EU Member States to Northern Ireland made from 1st January 2021)
- Box 2 (VAT due in the period on acquisitions of goods made in Northern Ireland from EU Member States), and
- Box 4 (VAT reclaimed in the period on purchases and other inputs (including acquisitions in Northern Ireland from EU member states)).
Note: This treatment relates to goods, not services.
Reverse charge (purchase of services) – a reverse charge (external link) is used to simplify your VAT process so you do not need to register for VAT in each country to which you supply services. For the services you receive, you act as if you are both the supplier and the recipient of the services. The result is that you credit your VAT account with an amount of output tax, calculated on the full value of the supply you’ve received, and at the same time debit your VAT account with the input tax to which you are entitled. This will affect: - Box 1 (VAT due in this period on sales and other outputs);
- Box 4 (VAT reclaimed in the period on purchases and other inputs (including acquisitions in Northern Ireland from EU member states));
- Box 6 (total value of sales and all other outputs excluding any VAT), and
- .
That customer must be registered for VAT for you to use a code with this treatment.
Note: Reverse charges relate to the purchase of services (and specific goods) abroad. This is in relation to Place of supply of services (external link), not Domestic reverse charge procedure (external link).
As they are an additional feature of VAT codes, VAT treatments apply at line level.
See Also
