In summary, the Reverse Charge applies if you buy a B2B service (except for exempt supplies) from outside of the UK even if they have a UK VAT registration number.
You calculate the amount of VAT (output tax) on the full value of the services supplied to you and then enter on your VAT Return the:
- amount of VAT you calculated in box 1 and, if you’re entitled to reclaim the VAT on your purchase of these supplies, also put the same figure in box 4 (this in effect cancels out the figure in box 1)
- full value of the supply in both box 6 and box 7
The example below shows a VAT Return completed where a VATable service for £100.00 has been purchased from a company outside of the UK:
| VAT due in this period on sales and other outputs | 1 | 20.00 |
| VAT due in this period on acquisitions from other EC Member States | 2 | 0.00 |
| Total VAT due (the sum of boxes 1 and 2) | 3 | 20.00 |
| VAT reclaimed in this period on purchases and other inputs | 4 | 20.00 |
| Net VAT to be paid to HMRC or reclaimed by you | 5 | 0.00 |
| Total value of sales and all other outputs excluding any VAT. | 6 | 100.00 |
| Total value of purchases and all other inputs excluding any VAT. | 7 | 100.00 |
| Total value of all supplies of goods and related costs, excluding any VAT, to other EC Member States | 8 | 0.00 |
| Total value of all acquisitions of goods and related costs, | 9 | 0.00 |
For detailed information please visit the HMRC website: https://www.gov.uk/topic/business-tax/vat