cross border of vat changes

mc25

Hi all, just need to pick some ideas about the new VAT changes which came to effect as from Jan 2010 regarding the EU supplying of services and vice versa.

My question is do all clients who have customers in EU (providing services) have to complete the EC sales list, also if they have got some subcontractors at the EU but are billed from UK do we have to do anything with this side as well, most of the suppliers are not VAT registered at the EU country they work from. What is the main thing I need to watch for when dealing with this.

Any suggestions are welcome.

Thanks

sheelagh

Eu vat

The new rules are supposed to be simpler, but there are still an number of exceptions to the new "general rule" for supply of services to EU customers.
First, you need to find out where the supply is to be taxed. Notice 741a is the one to read - it is not yet available in print but you can read it here, along with a summary of other changes. http://www.hmrc.gov.uk/vat/cross-border-changes-2010.htm

If you find that the supply is deemed to be in the EU member state where your customer belongs, you zero rate the supply, display their VAT number on the invoice, add the note "This supply is subject to reverse change rules" (or something similar, although I have yet to find this in the rules), report it on an EC Sales list and include it in box 6 of the VAT Return.

When dealing with purchase of supplies from EU suppliers, their invoices should state if you should should apply the reverse change procedure. If the supplier is VAT registered and the invoice is zero rated, this is a good indication that reverse charge applies. For services, you should have entries in boxes 1,4,6 and 7.

There are a number of exceptions to the general rule, depending on the nature of the service supplied. Notice 741a should help you to find the rules which apply to your client's situations.

Bluewednesday

Sheelagh, I know you are pretty clued up on this, I have read recently that we should be using Sage codes T20 and T22 for services to EU and not putting it in box 6 although still completing the EC sales list.

Have you heard anything about that?

http://www.accountingweb.co.uk/topic/tax/cross-border-vat-online/406170

Until I read this I hadn't heard that services to EU countries shouldn't go in box 6

deanshepherd

That is correct.

Supplies deemed to be where the customer belongs are outside the scope.

sheelagh

Eu vat

My apologies if I have the box 6 detail wrong.
There is enough confusion without me adding to it!

I have read that EC sales of services are "Outside the scope of UK VAT" , but I didn't interpret it as "Outside the scope" althogether.

I spoke to the Sage support people, who told me that T22 would result in the sale being included in Box 6 - I don't use the latest version so this was off my radar. Older versions can't accommodate the new rules - if you set up T22,23 and 24, the software will treat the transactions as goods, so a little bit of manual alteration required. Does anyone know if Sage will be issuing an update for older versions of the software to accommodate the new rules?

At a receent AAT event, the speaker advised that HMRC would expect business owners to have a reconciliation of Box 6 entries to the EC sales list. How does that work?

Bluewednesday

No wonder we're all confused about it!

deanshepherd

sheelagh wrote: »

I have read that EC sales of services are "Outside the scope of UK VAT" , but I didn't interpret it as "Outside the scope" althogether.

Is there a difference?!

At a receent AAT event, the speaker advised that HMRC would expect business owners to have a reconciliation of Box 6 entries to the EC sales list. How does that work?

It doesn't. The figures do not appear in Box 6. If they did, a reconciliation should be quite simple to do even without co-terminus VAT periods. Much like you can do for EC sales lists for goods, if required to do so by HMRC.

There will of course be a few problems such as EC B2B customers that are not VAT registered in their own country. Still outside the scope but cannot report on EC sales list without a VAT number.

I am not convinced about the requirement to report when the supply is deemed to be complete either. I will only be using the invoice date unless circumstances are exceptional e.g. sizeable invoices prepaid long in advance.

mc25

Thanks

Thanks all for your replies now I am really confused, I managed to ring HMRC help line to do with this and the lady I spoke to she said we need to include the figure in box 6 but u dont have to complete box 8 and 9, the other help I got from her was to read notice "Notice 741a" and i did establish the client is acting as an intermediary so she said I had to complete the EC listing, I just hope this is right. Services in EU is a night mare. .. what do you all think about this, I wont be suprised if the advise i got from them is not right as she did not sound interested at all.

so anyway I ended up submiting an EC sales listing, I just hope all goes on ok. More views about this will be appreciated.

Thanks for all your help.

sheelagh

EU VAT Rules

I have looked again at the rules and have found enough to satisfy myself that the net value of services supplied to EU business customers should not go in box 6.

As mc25 has found, the HMRC helpline staff have a tendancy to advise otherwise.

Grr!!

mc25

Thanks

Sheelagh thanks for your reply once again. Much appreciated