Solution Properties
Solution ID:
222001000101350
Last Modified Date:
Mon Jun 22 08:22:28 UTC 2026
Taxonomy Path:
Case category//How do I...//governmental/legislative compliance
Author:
[email protected]
Domestic reverse charge VAT
Description

Domestic reverse charge means the customer accounts for the VAT instead of the supplier.

  • If you sell these goods, don't charge VAT on the invoice
  • If you buy these goods, declare the VAT on your VAT Return

NOTE:

Enable VAT reverse charge on the customer or supplier record before you create the invoice. Sage Accounting then automatically displays the reverse charge VAT values when reverse charge applies.

HMRC domestic reverse charge VAT rules apply to certain goods and services, including wholesale energy, mobile phones and some construction services.

For more information, read HMRC's procedure on domestic VAT reverse charge on gov.uk. 

Cause
Resolution

Use these steps to record a sale or purchase where VAT reverse charge applies:

▼ Set up contacts for reverse charge

To process VAT reverse charge, you must set up your contacts for reverse charge VAT. 

For more information, read create a customer contact.

▼ Create the invoice
  1. Go to Sales/Purchases, then select Sales or Purchase invoices.
  2. Select New Invoice.
  3. Choose your contact and select Use VAT reverse charge.

    NOTE:

    Only contacts with VAT reverse charge enabled will display this option.

  4. Select the usual VAT rate for the goods.
  5. Save the invoice.

 

 

▼ How the VAT Return calculates
  • For sales, the net value shows in box 6 and the VAT doesn't show in box 1
  • For purchases, the VAT shows in box 1 and box 4, and the net value shows in box 7
  • When using VAT Cash Accounting, reverse charge invoices show on the VAT Return when you raise them
  • If you use Flat Rate VAT, reverse charge sales show in box 6 but not in the flat rate calculation

 

Steps to duplicate
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