As many of you are probably already aware (either from your own research or our previous blog post), as of March 1st this year, there will be an additional option to managing VAT. The HMRC are going to be introducing a 'VAT reverse charge' in just a few weeks time. If you'd like to read about exactly when and how it's mandated that you use this function, you can have a look at the government website here.
Commusoft have had this on our radar since it was initially announced (you can check out our VAT overview and advice from the experts, here). We've made sure that we wouldn't be taken by surprise and that the system would be prepared to deal with this change and any effects that this may have on the functionality of Commusoft itself.
As it stands, we integrate with a number of accounting packages, however, Xero is currently the only package that will be equipped with the ability to apply this 'VAT reverse charge'.
When creating customer or supplier invoices, you will now have the option (as well as the existing 0%, 5%, 20%) to use a VAT reverse charge. As mentioned on the website, this is similar to a 0% rate of VAT, with the difference that you will not be paying anything to HMRC or reclaiming anything either.
Essentially, when a reverse charge is applied, the recipient of the service/goods makes a declaration for both their purchase and their suppliers sale, effectively cancelling one another out.
We're currently able to accommodate for this through our Xero integration as soon as the changes come into place. We're already prepared and we've modified the system to include additional VAT options - you will see it in our dropdown menus when you are invoicing and deciding on the correct VAT to apply (above).
Other accounting packages that we integrate with, however, even though they may be primed and ready for VAT reverse charges to be applied, may not have the integration available for us to connect with. Once they have made the necessary updates, it is worth noting that there will also be a delay before we are able to utilise this function with these accounting packages too - we will have to communicate with them first, in order to apply this to our integration.