Overseas VAT query

PatsyC

Help please - we have taken on a client who sources private schools for overseas customers, provides them with consultancy services and also offers ongoing guardianship to the students when they are here. The company has never charged VAT on their sales invoices and I am unsure about this. The schools charge the consultancy company the annual fees and then the company recharges them on as an exempt supply which I think is correct, but I am concerned about whether the consultancy and guardianship would attract VAT if invoiced to the parents as individuals rather than a company. Can anyone offer so advice on this please - thank you.

jamesm96

PatsyC said:

Help please - we have taken on a client who sources private schools for overseas customers, provides them with consultancy services and also offers ongoing guardianship to the students when they are here. The company has never charged VAT on their sales invoices and I am unsure about this. The schools charge the consultancy company the annual fees and then the company recharges them on as an exempt supply which I think is correct, but I am concerned about whether the consultancy and guardianship would attract VAT if invoiced to the parents as individuals rather than a company. Can anyone offer so advice on this please - thank you.

Seems like a complicated one...

As a general rule I'd say that, if the client (the consultant) 'belongs' (according to HMRC's VAT definition of 'belonging') in the UK, and their overseas customers are private individuals (the parents of prospective students), then the 'place of supply' would be the UK, and standard VAT would apply.

If the client belongs overseas themselves then special rules apply anyway as per this Baker Tilly article: http://www.bakertilly.co.uk/publications/Independent-schools-affected-by-VAT-package.aspx

As for the treatment of the school fees that are charged to your client, that's also potentially fiddly for various reasons, but it doesn't actually matter - I'd have said that your client should be treating the school costs as a 'disbursement' anyway in which case it's not your client's problem to worry about the VAT status.

Of course if your client's turnover (excluding disbursements) is less than £82,000 then it's all moot anyway...

PatsyC

Thank you for your help