VAT on invoices to US company

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TheAbacus
TheAbacus Registered Posts: 13 New contributor 🐸
I have spoken to Helplines and nearly driven myself mad reading HMRC guidelines about the treatment of VAT for a customer in USA.

My client has produced the following invoices:

1. Training received in USA - client invoiced US supplier for time and expenses – no supply (or as HMRC said no consideration) so outside the scope for VAT. Invoice and associated expenses do not appear on VAT Return. (Strange one this as UK company actually paid for being trained!)

2. Training provided in USA – invoice to US company vatable at Zero Rate, also expenses, so included in boxes 6 & 7 of VAT Return.

3. Training provided in UK – invoice to US company (for training UK users of their software) I first thought was VAT at Standard Rate because place of supply was UK but because US customer “belongs” outside UK is this is outside the scope? And is the VAT on expenses also outside the scope or reclaimable?

I have probably read so much I am now missing the relevant points and the guidance in VAT Notice 741A just seems to go round in circles. Has anyone come across a similar situation?

Comments

  • payrollpro
    payrollpro Registered Posts: 427 Dedicated contributor 🦉
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    Hi there,

    I have invoiced several organisations outside the UK/EU and I was advised to include the words "This invoice has been compiled under the reverse charge principles". In essence your client does not charge anything whilst the payer accounts for their purchase tax but then reverses it as though the purchase tax has been paid.

    I did it for a NZ and US company and we were both happy with the way it worked. I have also dealt with the receipt of an invoice from outside the EU in the same way and it seems worryingly simple with entries in both input and output boxes.

    One quirk I met was some work I did for a USA company where I had to log into their secure server in Virginia (no it wasn't the CIA!) to carry out the work. In this case HMRC could not work out where the "place of supply" was and we agreed to treat it as work carried out in the USA even though I wasn't over there. As a result that one was exempt supply but neither of us could really work out the reality of it.

    Payrollpro
  • TheAbacus
    TheAbacus Registered Posts: 13 New contributor 🐸
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    Thanks PP

    I’m not sure reverse charges apply here; I think it might be all out of scope. I think what I will do, for the second time in my life I will write to HMRC explaining how I am dealing with it and await their agreement or correction.

    I was amused you mentioned a US security agency, I think my case is very close to that area.
  • payrollpro
    payrollpro Registered Posts: 427 Dedicated contributor 🦉
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    Hi,

    The company was Brainbench Inc, based in Chantilly, West Virginia. I created an on line payroll testing facility for payroll recruitment for them. I only mentioned it because someone I met thought I'd been working at Langley which is in Virginia and I didn't know that.

    Would have been interesting if it had been them, I understand they are an exceptionally difficult organisation to work for.
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