Following HMRC’s introduction of the new rules from 1 March 2021, QuickBooks have now updated their processes so you only need to have VAT activated on QuickBooks to be able to access the new VAT codes. You do not need CIS Tax activated as well.
You will need to activate the new VAT codes as follows:-
- Select Taxes
- Select Edit VAT
- Select Edit Rates
- Click on the small cog icon above the Action heading
- Select Include Inactive
You will then see a list of all VAT codes, you will need to activate:-
- 20% RC CIS – Domestic Reverse Charge for Building and Construction Services Standard
- 5% RC CIS – Domestic Reverse Charge for Building and Construction Services Reduced
Once these codes have been activated you should use these codes when the VAT Reverse Charge applies to either your sales invoice or when entering a Bill on to QuickBooks.
Updating your invoice description
HMRC have advised that you include wording on your invoices to show that the VAT Reverse Charge has been applied. Suggested wording is “Reverse Charge applies: Customer to pay VAT to HMRC”.
To include this wording on your template, you can either adjust your sales invoice template by selecting:-
- Cog Icon
- Custom Form Styles
- Select the template you want to update and then select Edit
- Select the bottom box of the invoice and then you can type the message into the VAT Summary Message box.
Please note, if you update your template, the message will appear on all invoices using this template regardless of whether the VAT Reverse charges applies or not.
Alternatively, you could create a new Product/Service code including the HMRC suggested wording so that this will only show when the VAT reverse charge applies.
If you have any queries or would assistance with this, please contact Hannah Stone in our Business Services Team.
March 12th, 2021