VAT Schemes and the Reverse Charge
Standard, Flat Rate and Cash Accounting, Northern Ireland, and the domestic reverse charge on the invoice and the return.
VAT Schemes and the Reverse Charge
Which VAT scheme you are on decides how your VAT return is built from your invoices and bills. dynamik.app supports the standard scheme, the Flat Rate Scheme and VAT Cash Accounting, plus the two things a UK contractor meets most: Northern Ireland establishment and the domestic reverse charge.
The scheme is set under Company Settings → Accounting. Add your VAT number under General first — until then the VAT section says so and stays hidden.
Choosing a Scheme
| Scheme | How the return is built |
|---|---|
| Standard VAT accounting | Box 1 from the VAT on invoices you issued in the period; Box 4 from the VAT on bills and reclaimable expenses; Boxes 6 and 7 the net values |
| VAT Cash Accounting Scheme | Boxes 1, 4, 6 and 7 from payments, by the date the money moved. A part payment carries its share of the document's VAT; refunds are netted off |
| Flat Rate Scheme | Box 1 is your flat rate percentage of your gross turnover for the period, including exempt and zero-rated income; Box 6 carries the same gross figure. Boxes 2, 4, 7, 8 and 9 are zero — the input VAT allowance is inside the percentage |
On the Flat Rate Scheme you enter the Flat rate percentage HMRC publish for your trade sector (VAT Notice 733). A business in its first year of registration takes 1% off the published figure — enter the already-reduced number. The return cannot be prepared until the percentage is set.
Two things the Flat Rate calculation deliberately leaves to you, on the return form where every box can be edited before submitting: capital goods of £2,000 or more including VAT, which you may reclaim in Box 4 with the net in Box 7, and any other adjustment HMRC allow.
Northern Ireland
Switch on Established in Northern Ireland if that is where the business is established. Boxes 2, 8 and 9 — acquisitions from and supplies to the EU — have been Northern Ireland only since 1 January 2021; for everyone else they are zero. It is a company setting, not a postcode test.
The Domestic Reverse Charge
For most CIS work between two VAT-registered businesses, the customer accounts for the VAT, not you. On the invoice line, pick the Reverse Charge (20%) tax rate — every company has it, under code T4:
- The line is charged at 0% to the customer, so the invoice total carries no VAT for that work
- The PDF shows a row VAT to be accounted for by customer with the notional 20%, outside the VAT row and outside the total, and the legend reverse charge: VAT Act 1994 Section 55A applies
- On a bill you receive with that rate, the return puts the VAT in Box 1 and the same amount in Box 4, so it nets to nil, with the net value in Box 7
Reverse-charge VAT always follows the document date, even on cash accounting — there is no VAT in the payment to wait for.
The Tax Rates page lets you rename and reorder rates, but the reverse-charge behaviour belongs to the seeded Reverse Charge rate only. Keep it active rather than creating your own.
Accounting Method and Year End
The same page holds your Accounting Method — a limited company is on the accrual basis under FRS 102; a sole trader can choose cash or accrual — and your Financial Year End.