Reverse Charge Mechanism
Definition
A VAT/GST rule shifting the obligation to account for tax from the supplier to the customer, common on cross-border services and certain domestic supplies. The customer records both the output and input tax on the same transaction.
Related Terms in International Tax
VAT Flat Rate Scheme
A simplified UK VAT scheme where a business pays a fixed percentage of its gross turnover as VAT instead of tracking input and output VAT in detail. It trades some accuracy for far simpler accounting.
Corporation Tax (UK)
The tax UK companies pay on their profits, including trading profits, investment income and chargeable gains. Companies must file a return and pay by set deadlines after their accounting period ends.
National Insurance (UK)
UK contributions paid by employees, employers and the self-employed that fund state benefits and pensions. Different classes and rates apply depending on employment status and earnings.
Self Assessment (UK)
The UK system through which individuals with untaxed income — the self-employed, landlords and others — report income and pay tax by filing a return each year, rather than having all tax collected at source.
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