All 25 VAT Records questions
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What is the annual accounting scheme for VAT? How do you correct VAT errors from previous returns? What is Making Tax Digital (MTD) for VAT? How do you reconcile the VAT control account to the VAT return? How is import VAT and VAT on acquisitions handled? What is partial exemption and how does it affect input VAT recovery? How is VAT bad-debt relief claimed and recorded? What penalties and interest can arise from VAT errors or late filing?
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What is the reverse charge and when does it apply?

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Answer

Under the reverse charge, the customer (not the supplier) accounts for the VAT on certain supplies—common for services from overseas suppliers and specific domestic sectors (e.g., construction). The customer records both output and input VAT on the same return, so it's usually VAT-neutral but must be recorded correctly.
Reverse charge service 1,000: account for 200 output and 200 input VAT (net nil if fully recoverable).
Real-world example For a service bought from an overseas supplier, the business self-accounts for the VAT under the reverse charge.

Common follow-ups: Why is it often VAT-neutral? | Name a domestic reverse-charge sector.

Sales & Purchase Ledgers VAT Records VAT Records
All 25 VAT Records questions