Any VAT experts? European VAT / SAGE question.

Chinless Wonder

Hi folks.

Anyone here up on technical side of intra-European community VAT issues?

Need some help on VAT treatment of provision of services in Belgium.


Service provider is UK VAT registered
Service is a person giving a talk for workshop/ conference attendees
Customer is a Belgian not-for-profit organisation not VAT registered
Customer runs workshops/ conferences selling tickets to attendees (ie - carries out business)
Service provided in Belgium

Had one sale to this customer last year; didn't charge VAT. Auditors flagged it up but when I explained customer scenario they accepted that it was a B2B transaction.

However I now do my EC Sales List in SAGE which will not let me post invoice with EU VAT tax code without a VAT number.

I'm now concerned auditor is wrong and I should be charging (or rather paying over) VAT on this. Customer is sneaky and put "Fee is €xxx inclusive of any taxes" on the contract so VAT is our cost not theirs.

CW

*Jo

My understanding is only with goods not services but it is that if the goods are delivered to a non UK country within the EC you can only not charge VAT if the customer is registered for VAT in their own country and has a valid VAT number which you enter on the EC Sales list and Intrastat form if applicable for services (which I think it is but am happy to be corrected).

HMRC do an excellent free workshop on selling abroad and it explains all things like this.

Is there no way of changing the contract if they didnt' mention they weren't VAT registered at the time?

HMRC website gives good guidance on selling abroad and should confirm that you unfortuately do have to charge VAT if the customer is not registered for VAT in their own country.

Regards Jo

Chinless Wonder

That was my understanding, but I've been confused.

We had a situation with the same customer last year. We made a sale to them, no VAT, which I didn't enter in SAGE correctly (it went in as T0 not T22 or whatever it should be). So it wouldn't have appeared on the EC sales list if I had run it from SAGE (I was doing it manually at that point).

The auditor flagged it up. Their words were:
"The VAT on the Belgian sale. As with all VAT areas this is not straightforward. As you are supplying a service, if you obtain proof that the customer is in business then no UK VAT is applicable. This is usually done by the customer giving you a note of their VAT number."
then another later email after some discussion:
"I would interpret your supply to be B2B as you are supplying to another business who then sold on your services to the artists from Belgium.
Re the proof the customer is in business this is generally done by the customer supplying their VAT number. If they are not VAT registered then alternative evidence can be used, for example a letter from their tax authority or Chambers of Commerce."

We used that "alternative evidence" as I found the organisation listed on the Belgian register of companies. The auditor was happy that proved they were a business and therefore B2B.

My problem is that SAGE has no means of accepting this "alternative evidence" as it gives an error if no VAT number is entered in the customer record. And this has made me worried that I'm doing it wrong, even given what the auditor said (which came with a healthy "I'm not a VAT expert" proviso)

Zut alors as they might say in parts of Belgium

sheelagh

You can change the settings in Sage so that it will accept your sales invoice with tax code T22 but I don't think that will help. EC sales lists are for reporting supplies of goods and services to VAT registered businesses in other EU member states. Your customer is not VAT registered so the transaction should not be reported on the ECSL.

Instead, take a look at the treatment of this transaction by reference to VAT Notice 741a. These rules changed in Jan 2010 and again in Jan 2011 so it is possible that the treatment you applied on the first transction is no longer applicable.
From the information you have given, it seems that this is a B2B supply of services and the place of supply is Belgium.
If your company is not registered for VAT in Belgium, you don't charge VAT when the place of supply is in Belgium.(see section 5.2 of Notice 741a). Again, from the information you have provided, this service comes under the special rules listed in the table in Section 8.1.1, and indicates that the place of supply is Belgium for both B2B and B2C supplies.
So, you don't need to charge VAT and you don't need to report it on an ECSL.

Chinless Wonder

Thanks Sheelagh - that's exactly what I needed. I've also had email from SAGE explaining how to get round the no VAT number issue... so I have some confidence that I'm on the right track!

Thanks again.