Changes to UK VAT Legislation - Help!
HI, I have received this from a supplier:
Changes to UK VAT Legislation
On 1 February 2016 the law concerning the charging of VAT on wholesale supplies of voice telecommunication services in the UK changed.
These changes affect the way that we apply VAT to your invoices, but do not change the way we contract with you or the price of our services.
These changes only affect voice and related data services (SMS, MMS and VoIP) and do not affect data, access or line rental services.
On 1 February 2016 HM Revenue and Customs ('HMRC') introduced emergency legislation to combat the threat of VAT fraud in the wholesale telecommunication sector.
From this date the supplier of services falling within the scope of the legislation cannot charge VAT. Instead the UK VAT registered business receiving the service will be required to self-account for VAT using a process called “reverse charge accounting”.
What this means for you
You will notice some changes to our invoices. Specifically we will not be applying the 20% standard rate of VAT to the whole of some invoices and in some cases you may receive invoices from us without VAT being charged at all. As the recipient of these services, you are required to account for the VAT due on the services you receive from us.
You will still be entitled to recover the VAT you account for as input tax as part of the reverse charge accounting process.
This means that there should be no net tax payable to HMRC and you do not suffer financially.
VAT reverse charge
Details of how to apply the VAT reverse charge can be found in HMRC Business Brief 01/16 which can be found on HMRC’s website.
How we will be implementing this change
We will cease charging VAT on the services affected by this change from 1 February 2016. Your invoices will display the amount which is subject to the new legislation, under the total invoice value. The description will be “Reverse Charge: S55A VAT A 94”.
I don't know what Vat rate to use in QB or if i should set up a new one!
My accountant doesn't know QB very well so steering clear of asking them thus far...
thanks in advance
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