How to raise a VAT reverse charge invoice for a customer using Okappy and QuickBooks

From 1st March 2021, if you supply goods and services to the construction sector, then you will need to implement VAT reverse charging on your invoices.

Domestic reverse charge VAT legislation (DRC) is a change in the way Construction Industry Scheme (CIS) registered construction businesses handle and pay VAT. It is being introduced in the UK on 1 March 2021, having previously been delayed from October 2019.

Read on for step by step instructions on raising an invoice with a VAT reverse charge.

Set up QuickBooks for Domestic Reverse Charge

From within QuickBooks,

Go to your Account and settings menu

QuickBooks accounts settings

Select Advanced

QuickBooks cis settings

Ensure that Enable CIS is turned On.

For more information, see QuickBooks support.

View/edit a product or service in QuickBooks

To view or edit your product or services in QuickBooks

Go to the Invoicing menu
Select Products and Services

QuickBooks invoice product services

Edit an existing item (Product and Service), or select New

QuickBooks CIS Products

Set up your customer for CIS in Okappy

Set up your customer in Okappy as a CIS customer

Go to the Connections menu
Find the relevant customer
Click Account settings

Okappy customer account settings

Check VAT reverse charge
Enter the CIS rate

Okappy Customer VAT Reverse Charge

Raise your invoice and export to QuickBooks

Raise your invoice for your customer
Select the item which you added in Xero

The tax rate will automatically update to show Reverse charge applied and the total VAT will be updated.

Okappy VAT Reverse Charge label

The final invoice will show that Reverse charge applies and that the customer to account to HMRC for the reverse charge output tax on the VAT exclusive price of items marked reverse charge at the relevant VAT rate as shown above.

Okappy VAT Reverse Charge Invoice