VAT on USA purchase

[Scotchpie]

Hi
Just enrolled on an O'Reilly School of Technology course which is based in the USA.

As there is no VAT in the USA, does this mean I record it without VAT in my accounts or can I still calculate the 20%?

Cheers

[stek]

Without VAT

[Scotchpie]

Thanks Stek, thats what I thought.

[TheCyclingProgrammer]

There's no VAT on the purchase but as its a service the reverse charge will apply. You'll need to record it on your VAT return as if you'd supplied it to yourself - calculate the equivalent VAT (20% if it would be standard rated over here) and put in Box 1 and 4.

There is some confusion over whether it should go in Box 6 and 7 if you're on the FRS. When I first looked into this, I came to the conclusion that you shouldn't, found a few sources that backed this up and also asked HMRC and was told not to. If you read the link below, it states that you should enter the VAT on reverse charged supplies in Box 1 and 4 but *not* to include it in your FRS turnover calculations. It also mentions nothing about the reverse charge under the instructions for Box 6 and 7. This all makes sense.

However, when the software I use to do my VAT returns (FreeAgent) added support for the reverse charge, they *do* add the net cost to box 6 and 7 even if you're on the FRS. When I queried this, they said that HMRC had told them it *should* go in Box 6 and 7.

So who knows what the correct answer is. Box 6 does sometimes contain stuff that isn't part of your FRS turnover - capital purchases over £2k for example. Speak to your accountant and see what their view is and go with that.

If anyone else here is on the FRS and receives reverse charged supplies, do you add the net amounts to Box 6 and 7?

It makes no difference to your VAT liability, just pointless HMRC paper pushing.

More information:
http://www.hmrc.gov.uk/manuals/vatpo...tposs14300.htm

[sal]

What TCP said, plus a quick one before NCUK had a chance to intervene:

What does your accountant have to say about that?