Reverse Charge VAT
In some circumstances, a business can (or must) use the reverse charge VAT system. With a reverse charge, the seller does not charge VAT on the sale. Instead, the buyer must declare the VAT and report it on their own VAT return.
Because of this, the way you record a reverse charge depends on whether you are the buyer or seller.
Reverse Charge VAT on Purchases
For a purchase, fill in the details of the purchase as usual. Then open the advanced section near the bottom of the page. Locate and tick the Reverse Charge tickbox in the advanced section and save the purchase. This will include the purchase in your VAT return as normal, and will also add the reverse charge VAT to your VAT return.
Reverse Charge VAT on Sales
If you make a reverse charge sale, you do not charge VAT. Because there is no VAT due, you enter the sale as a normal sale with 0.00 VAT and a 0% VAT Rate.