New VAT rules for Principal Contractors and Sub-contractors
On 1 September 2008 the Irish Revenue implemented some new Vat
Rules for Principal & Subcontractors (in the construction industry).
Effectively Sub-contractors will no longer bill Principal contractors
for VAT. Instead each sales invoice will need to be sent excluding any vat with
"reverse charge" on the face of the invoice.
What do I need to do in QuickBooks Pro/Premier with this change?
If you are a sub-contractor then you simply need to add a new VAT code at 0%.
The process is more tricky where an individual/company is both a sub-contractor
and a principal contractor.
In QuickBooks 2008:
One suggested solution (for principal contractors) involves using a
combination of VAT groups, Vat codes and Vat items to get the desired result
on your VAT3. In the example below We were able to get the VAT3 report to
include the notional vat calculation on purchase and sale.
Lets take an example of a sub-contractor supplying us (a principal contractor)
services to the value of €48,000. The Vat we'd expect to be charged on
this would be 13.5% (or €6840).
We enter the bill in Quickbooks as follows:
The VAT Items, Groups and Codes would have to be set up
been set up below:
This leaves us with the VAT 3 showing:
Hint:
Examine the way that VAT codes, groups and items have been set up for
intra-EU (EC) transactions.
In QuickBooks 2006 or earlier:
You dont have the same level of control in Quickbooks 2005 or 2006.
» Go to the Lists menu and click VAT Codes List.
»
Right click and add a new Irish VAT Code (0%)
» Click OK.
You'll need to manually adjust your numbers for VAT3 report for inputs and
outputs.
Disclaimer: The scenarios aboce should not be construed as legal,
financial or tax advice. Consult with your tax or financial advisor. While
every effort is made to ensure accuracy - solutions implemented at users own
risk.
Quickbooks Consulting
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