This alternative is intended for purchase orders that shall be handled with reversed liability for payment (reverse VAT). In some cases within the construction industry the buyer reports both the input and the output VAT. This can be selected by default on the supplier in the Update Supplier procedure. The reversed liability for payment (previously called construction VAT) will then be used by default during the order registration.
If you select the Reversed Liability for Payment box, the purchase order will be managed the same way as a purchase order to an EU supplier, in other words the VAT amount will automatically be set to zero (0) and a fictitious input and output VAT will be coded. You will find special standard accounts for reversed liability for payment in the Chart of Accounts / Standard Accounts procedure in the Global Settings.
If you use the setting Default supplier group at reversed liability for payment, under Orders / Inquiry under the Purchase tab in the Settings procedure, the supplier group for the reversed liability for VAT will be selected by default on the order if you check the Reversed liability for payment box. The purpose is to code the purchased construction services or scrap-metal etc. correctly, based on the supplier group.