I'm a straightforward flat-rate scheme contractor who pays a company in Germany for a service. That company doesn't charge me VAT and their invoices are marked "reverse charge applies". I don't acquire any goods from the EC or make any supplies there.
After several calls to the VAT helpline I've been advised with clarity:
Amount actually paid to German company (which does not include VAT) x 20% = Notional UK VAT
Box 1 contains ((My Turnover inc VAT * my flat-rate percentage) + Notional UK VAT)
Box 2 is empty.
Box 3 is (Box 1 + Box 2)
Box 4 contains (Notional UK VAT)
Box 5 is (Box 3 - Box 4)
Box 6 contains (My Turnover inc VAT) + (Amount actually paid to German company)
Box 7 contains (Amount actually paid to German company)
Box 8 is empty
Box 9 is empty
End result of all this, since Box 4 is subtracted Box 3, is that the amount I actually have to pay (box 5) is exactly the same as it would have been if I'd not bought the services from the EC state - my Turnover inc VAT * my flat-rate percentage.
One could argue that all this is pointless, and I was expecting to have to pay the notional UK VAT, but it's good to make sure everything t is crossed and every i is dotted :-)
I asked them to clarify the documentation on this incredibly confusing arrangement! Hope this helps.
