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VAT Return for Purchase

Overview

When your business is a RCT Principal, the RCT transactions take a similar approach to EU Notional VAT transactions. It is applied on the both sides of the VAT return which actually cancel out. It will not appear in the E1 /ES1/ E2/ ES2 boxes. 

Please note, RCT is only applied when principals and subcontractors are in the same country.  

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Please Note:

˃ The ‘Net’ is the invoice or payment if the business is on a cash basis. 

˃ VAT is the notional VAT rate. 

˃ Gross is the summation of the Net and the notional VAT amount

˃ In summary, on the Principal VAT return the ‘Notional' VAT rate is applied to the RCT invoice, and that value is included in boxes T1 and T2.

See below: 
 
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