1. Using Financials for EMEA
  2. VAT Reporting for the UK

VAT Reporting for the UK

This topic explains the implementation and usage guidelines for the Reverse Charge Sales Listing Report for UK, using an end-to-end flow example. Details provided include pre-requisite setup, important transaction entry aspects, and report output details.

The report serves as a record of UK sales for high-value electronic goods subject to the reverse tax charge, which are reported to HMRC (HM Revenue & Customs). Specifically, the specified goods to which the reverse charge applies are:

  • Mobile telephones
  • Integrated circuit devices, such as microprocessors and central processing units, in a state prior to integration into end-user products
  • Emissions allowances, emissions reduction units, and emissions reduction certificates

Please note that the reverse charge applies only to the sale and purchase of specified goods and services:

  • Between UK tax registered organizations
  • For goods, where the VAT exclusive value of the supply exceeds the £5,000.00 threshold
  • Where the goods and services are bought and sold for business use

It is important to understand that the Reverse Charge Sales Listing Report for the UK solely considers the sales side. Responsibility for accounting VAT to HM Revenue and Customs (HMRC) for supplies of the specified goods or services lies with the customer, not the supplier.

Key Insights

Before implementing the Reverse Charge Sales Listing Report for the UK:

  • Set up the following entities:
    • Geographies
    • Enterprise Structure
    • Tax Regime to Rate setup
    • Tax Party Profiles
    • Tax Rules
    • Customers
    • Common Options for Oracle Payables and Oracle Receivables
    • Receipt Classes and Methods

Complete the implementation project before commencing the Feature Specific Setup

Feature Specific Setup

You'll need to set up the following before running the Reverse Charge Sales Listing Report for UK:

Legal Reporting Unit Tax Profile Registration

Ensure that the Legal Reporting Unit tax profile is configured as Self Assessment so that UK Reverse Charges are calculated correctly. Register the Legal Reporting Unit tax profile as Self Assessment. Follow these steps to configure the Legal Reporting Unit tax profile correctly for UK Reverse Charges:

  1. Go to the Manage Party Tax Profiles task.
  2. Search for Legal Reporting Unit Tax Profiles based on the specific Legal Reporting Unit value associated with the Legal Entity used on Receivables invoices requiring self-assessed tax.
  3. Review the Tax Registrations tab within the selected Legal Reporting Unit Tax Profile. If not already done, create a tax registration for your UK tax regime.
  4. Once the tax registration record is defined, place your cursor on the Tax Regime Code for which self-assessed tax is desired, and then select View Registration Details.
  5. On the Edit Tax Registration page, ensure that the Set as self-assessment (reverse charge) option is selected.

Customer Party Tax Profile Registration

To comply with UK Reverse Charges, ensure that your customers are registered. You need to create customers and make sure to enter their Registration Number in the third-party site tax profile. Verify the Tax Registration Status and Registration number on the Edit Tax Registration page.

Taxes

To set up the VAT tax for the UK Tax Regime, follow these steps:

  1. Go to the Manage Taxes task through the Navigator.
  2. Under Tax - GB VAT, you need to configure the Tax Rate so that you (as the customer) pay VAT to HMRC at the rate of 20% of the VAT exclusive selling price for reverse charge goods.

Tax Reporting Types and Codes

To identify your reverse charge transactions, you need to set up Tax Reporting Types and codes. The report will display the transactions based on your Tax Reporting Type and Code combination.

Here are the steps:

  • Access the Manage Tax Reporting Types task through the Navigator.
  • Enable the Reporting Type Use as Tax status.
  • Assign the Tax Reporting Code to the Tax Reporting Type.

Tax Status

The tax status is used to represent the VAT for the UK tax regime. It is also necessary to attach the tax reporting codes for the reverse charges, so that the transactions can easily be identified for reporting purposes. Here's how to do it:

  1. Navigate to the Manage Tax Statuses task.
  2. Locate the Tax Status Code - GB_UK_MTIC_ZERO_RATE.
  3. Attach the Reporting Type Code to the GB UK Missing Trader Intra community Zero Rate with Reverse Charge tax status.

Tax Determining Factors

The Tax Determining factors are required to automatically apply the correct tax rule for the Receivables transactions. This will ensure that the transactions are identified as being applicable to Reverse Charges. Follow these steps:

  1. Navigate to Manage Determining Factor Sets task.
  2. Locate the Determining Factor Set Code – GBMTIC NEW ZERO NO INV.
  3. Configure the tax determining factors and assign the Reverse Charge tax combinations when the following conditions are met:
    • Ship to and Ship from are located in the UK.
    • A Defined Product Category is added to the Receivables transaction.
    • The customer is registered within the Party Tax Profile.
    • The transaction contains the correct Business Transaction Category.

Tax Status Rules

To ensure proper rule derivation, you need to set up Tax Status Rules and attach the tax condition set. Follow these steps:

  1. Access the Manage Tax Rules task through the Navigator.
  2. Create a tax status rule with the Rule Code - GBMTIC ZERO RATE NEW AR and attach the appropriate tax condition set.
  3. Also, configure another tax status rule with the Rule Code - GB VAT STATUS and link it to the corresponding tax condition set.

Transaction Entry in Receivables

To properly enter Receivables transactions, follow these steps:

  1. Access the Create Transaction task using the Navigator.
  2. Create invoices for your Business Unit, ensuring you take note of the following details:
    • Select your Legal Entity in the Miscellaneous tab.
    • Enter the First-Party Tax Registration Number.
    • Make sure to select the appropriate Product Category and Transaction Business Category.
    • Complete the invoice entry.

Keep in mind that the transactions you enter in Receivables will have the following characteristics in the report output:

  • Amounts will be rounded to the nearest Pound.
  • Credit transactions will be added to the month of the transaction date.
  • Discounts will be applied to transactions when the receipt is entered.

Reporting for the UK

Report Submission

To submit the Reverse Charge Sales Listing Report for UK, follow these steps:

  1. Access the Scheduled Processes from the Navigator.
  2. Schedule the process Reverse Charge Sales Listing Report for UK.
  3. Make sure to provide the following mandatory parameters:
  4. Your Legal Entity
  5. Tax Registration Number
  6. Tax Reporting Type
  7. Tax Reporting Code

Additionally, you have the option to specify the Tax Point Date range for the dates you wish to include in the report. Usually, the report is run for a calendar year. To do this:

  • Enter 1 Jan YY for the From Tax Point Date
  • Enter 31 Dec YY for the To Tax Point Date

Creating a CSV file

You have two options for submitting the information to HRMC. You can either enter it directly online or upload a comma-separated values (CSV) file.

To create the report output in .csv format, follow these steps:

  1. Click the Advanced button.
  2. Select the Output tab.
  3. Choose the U.K. Reverse Charge Sales List Report CSV Layout.
  4. Select the Format as Text.
  5. Submit the report.
  6. Save the output file as a .csv file.

You can submit your report in pdf or html format using the U.K. Reverse Charge Sales List Report layout. This will let you verify the content.