Domestic Reverse Charge in Zoho Books (UK edition)

Domestic Reverse Charge in Zoho Books (UK edition)

Dear customers,
 
With HMRC implementing Domestic Reverse Charge (DRC) on construction services from 1 March 2021, Zoho Books now lets you track DRC on sales and purchase transactions. Although DRC on construction services is being implemented now, the reverse charge mechanism has been in effect since 2007 for various goods and services and Zoho Books supports reverse charge on such transactions.
 
What is Domestic Reverse Charge (DRC)? 
 
Domestic Reverse Charge (DRC) is a legislation introduced to prevent fraudsters from not paying their VAT due to HMRC which they had collected from their customers.
 
After a delay due to the Covid-19 pandemic, the DRC legislation has finally come into effect on 1 March 2021. DRC is applicable for most businesses that are registered for VAT who report under the CIS scheme. These businesses typically supply construction services which come under standard and reduced rate services.
 
When should you apply domestic reverse charge?
By default, domestic reverse charge is applicable on services that are covered under CIS. If an invoice contains both CIS services and non-CIS services, domestic reverse charge will still apply.
 
HMRC has provided a detailed flow chart to help you decide if you must apply domestic reverse charge or standard VAT rates. Refer them to know when you must apply the domestic reverse charge.
 
Also, DRC does not apply to end-users or intermediaries who do not alter the materials but only trade them. This means that normal VAT rates will apply for end-users, provided they have given in written format (in writing, email, or contract) that they are an end-user or intermediary.
 
Applying domestic reverse charge in Zoho Books 
 
Before you can apply domestic reverse charge, you will have to enable it in Zoho Books settings. To enable:
 
  1. Log in to Zoho Books and click the Settings icon at the top right corner.
  2. Select VAT.
  3. Check the Enable Domestic Reverse Charge in Sales transactions option.
  4. Click Save.  
 

Now, the invoices you create in Zoho Books will have an option to apply domestic reverse charge on them. To apply domestic reverse charge for an invoice:
 
  1. Go to Sales > Invoices > + New.
  2. Select the customer for whom domestic reverse charge is applicable.
  3. Check the This transaction is applicable for reverse charge option. (This option will be shown only if the selected customer’s VAT treatment is United Kingdom)
  4. Fill in the other details and create the invoice. 

 
Now, although the VAT rate will be applied on the item, it will not be added to the total amount that you will collect from the customer.
 
For all VAT-registered organisations in Zoho Books, the option to apply DRC will be available on all purchase transactions by default. You can apply it while recording a purchase transaction.
 
What should you do now? 
  1. Take stock of the supplies that you make or receive from other VAT-registered contractors and check if DRC is applicable on them.
  2. Apply DRC on the respective transactions in Zoho Books.

If you have any queries on applying domestic reverse charge on transactions in Zoho Books, feel free to comment below. We are here to help you.
 
Cheers,
Alen J. Abraham
The Zoho Books Team 

    • Sticky Posts

    • Features, Feedback and Votes

      We’re launching the Feedback Forum for our customers. This is 'THE' place where you can add everything  you’d like to see in Zoho Books. If you don't find the specific feature you need, simply add it so others can also vote for it. While we cannot promise a ‘release date’ for each of your feature  request s, we definitely want to know what would help you run your business better.  We will update feature requests that we're working on and by participating in the forums, you'll remain updated on every
    • Zoho Books (UK edition) in the post-Brexit era

      Dear users,   As you may know already, the transition period for Brexit is ending on 31 December 2020 and Britain is exiting the EU. In this post, we will look into its implications on VAT treatments and the changes in Zoho Books.   VAT Treatments   Pre-Brexit,
    • Zoho Books is now integrated with Slack messenger

      Hello,   Zoho Books is glad to announce its latest integration with Slack, a messaging app for teams. If you are a Slack user, and you seldom log into your Zoho Books account, then we have got the perfect news for you. With our latest integration, you can monitor your customer's Client Portal activities over Slack. The notifications that are triggered based on your customers’ actions in the Client Portal gets simultaneously pushed into your preferred Slack channel (#general, #random, etc.) The integration
    • Webinar: Introduction to the Client Portal

      Business owners know there is never enough time in the day. Not only do you have to beat the competition and make the sale, you then have to make sure you get paid. In fact, the sales process starts way before the sale, and never really ends. Preparing and getting estimates approved, collecting payments, and fielding customer requests for information related to past transactions are all part of the day in the life of a business owner. Well, Zoho Books can offer some relief to weary business owners.
    • Join us at Zoholics - Finance & HR User Conference

      Hello, I have some special news to share with you.  We are organizing  our very first  Zoholics  for Finance and HR applications at Zoho headquarters on 06-07th November in  Pleasanton , CA.   The agenda is simple: help you master Zoho Books and get the most out of it for your business. I also have some exciting news to share with you regarding the new products that we’re building.   To know more, here's the agenda :  https :// www .zoho.com/ zoholics /finance-hr. html   In the past 6 years, we've

    Zoho Pagesense Resources

        Zoho SalesIQ Resources



              Zoho TeamInbox Resources

                Zoho DataPrep Resources


                    Zoho CRM Plus Resources

                      Zoho Books Resources


                        Zoho Subscriptions Resources

                          Zoho Desk Resources

                            Zoho Projects Resources


                              Zoho Sprints Resources


                                Qntrl Resources


                                  Zoho Creator Resources


                                    Zoho WorkDrive Resources




                                        Zoho Campaigns Resources

                                          Zoho CRM Resources

                                                      Design. Discuss. Deliver.

                                                      Create visually engaging stories with Zoho Show.

                                                      Get Started Now