When Must You Self-Charge VAT? Understanding Reverse Charge and Self-Supply Mechanisms

• Suppliers usually account for VAT to HMRC, but sometimes customers must account for VAT themselves.
• Reverse charge and self-supply mechanisms prevent VAT avoidance and fraud.
• Purchasing services from abroad requires UK businesses to use the reverse charge procedure.
• Businesses account for output tax and claim input tax, including supply value in VAT returns.
• Common services include professional, digital, marketing, and intellectual property services.
• Construction industry uses domestic reverse charge for specified services to combat fraud.
• Applies to building, demolition, repair, installation, and equipment hire services.
• Suppliers issue invoices with 0% VAT, customers account for VAT at standard rate.
• Exceptions include supplies to non-VAT registered customers and end-user supplies.
• Mobile phones and computer chips face reverse charge for transactions over £5,000.
• Suppliers provide invoices with reverse charge notation, no VAT shown.
• Purchasers account for output tax and may claim input tax.
• Post-Brexit, international goods purchases have different VAT obligations.
• Import VAT applies from EU countries, with postponed VAT accounting available.

Source: deeksvat.co.uk

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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