Reverse Charge

Please take a look at this article from HMRC: as it explains what the reverse charge is, when it should be used, and how it should be accounted for on your VAT return.

To set this up the within Tally you need to set up the supplier, by going to the supplier tab.  Then under 'Other info and Settings' you should see a 'This supplier is VAT registered in another EC Member State' tick box - You need to make sure that this is ticked.

The next thing that you need to ensure is that the outgoing type that you use to record the purchase for this supplier has the 'Treat as a product' box unticked.  You can check this by going to Purchases>Outgoing Types>Choose the relevant outgoing type.

What if the 'Treat as a product' box is not showing? This is because in Settings> VAT Settings> You don't have EC Sales ticked.

The reverse charge should now happen automatically, and when you run your VAT return and click the 'Download calculations' button, you will see this purchase appear towards the bottom of the spreadsheet under 'PURCHASES FROM OTHER EC MEMBER STATES (Services - Reverse Charge).

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