On the 1st of March 2021 the HMRC changed UK VAT legislation for VAT registered customers as well as VAT and CIS registered contractors.
This means you are required to manage VAT in simPRO differently.
simPRO’s Reverse Tax Charge feature enables you to record and account for reverse charge VAT while remaining compliant with the change in legislation.
How do I set up reverse charge VAT?
Once rolled out, the full process for setting up reverse charge tax will be available on the Help Guide.
How will reverse charge VAT work in simPRO?
In simPRO, reverse charge VAT tax codes can be created and applied in a similar process to a standard tax code. Create it in the system setup, designate it as reverse change and apply it to contractors, customers and line items in jobs, and contractor work orders as required.
For Xero users, you will need to map the reverse charge tax codes using the accounting link mapping page.
When an invoice or contractor invoice is generated, the reverse charge tax line will appear in the totals.
How can I add reverse charge tax separately for materials and labour on a contractor work order?
In order to add reverse charge VAT separately for material and labour on contractor work orders, two separate orders must be created or the work order must be broken down into multiple invoices.
Add labour to one of the work orders and materials to the other. Once both work orders have been created they can be consolidated into one contractor invoice.
Alternatively, create one work order and raise a partial invoice with reverse charge VAT and raise another without.
Will simPRO have reverse charge VAT implemented in time?
We are working to add functionality for reverse charge tax as soon as feasible, while ensuring that it continues to function properly with existing simPRO features. Because reverse charge VAT impacts many different areas of the system and your accounting information, we are being especially rigourous with our quality assurance processes. Please be aware that the HMRC are providing a 6 month grace period and we expect to have reverse charge tax in all UK builds before the end of March.
How will I know that Reverse Tax Charge feature reverse charge VAT has been added to my build?
As soon as we start releasing the Reverse Tax Charge feature into your build we will notify you via in-app notification. The simPRO Learning Helpguide will also house materials to educate you and your team on how to use the feature to assist you in complying with Reverse Charge VAT legislation changes.
How can I report on reverse charge tax?
Customer invoice and contractor invoice reverse charge reports are now available within simPRO. Information on where to find these reports, and how to use them, is available on the Help Guide.
Do I need to update my accounting package?
Reverse charge tax codes integrate with Xero and Sage.
We are currently waiting for QuickBooks to provide a viable solution for reverse charge tax. When available we will update the integration.
In the meantime if you are using QuickBooks Online or QuickBooks Desktop / Reckon, you can still manage reverse charge tax in simPRO using an alternative workflow. Click here to learn more about Domestic Reverse Charge Tax for QuickBooks.
- Information relating to reverse charge tax for QuickBooks Online can be found here.
- Information relating to reverse charge tax for Xero can be found here.
- Information relating to reverse charge tax for Sage can be found here.
- QuickBooks Desktop is still being worked on, however there is no timeline for this update.
For more information, contact your accounting package support.
Do I need to update my invoice forms?
When it is released and set up, reverse charge tax will appear in the totals section of your invoice forms. However, you are legally required to indicate that you are using reverse charge VAT in the footnote of your forms.
Go to System > Setup > Form Setup > Invoice > PDF Template > Footnote to update the footnote on your invoices.
Some examples of relevant wording includes:
- reverse charge: VAT Act 1994 Section 55A applies
- reverse charge: S55A VATA 94 applies
- reverse charge: Customer to pay the VAT to HMRC
Please note that Form Builder templates will be made compatible with reverse charge tax in a future release.