Output VAT on work done outside of UK

System
System Posts: 100,537 🤖 Admin 🤖
edited June 9 in AAT member discussion
I have a potential new client who is a marine consultant based in the UK. However he regularly provides his services overseas. Sometimes these services are invoiced to companies in the UK, even though the work was done outside the UK, and sometimes the services are invoiced to companies outside of the UK. Does anyone know whether output VAT should be being declared on these sales and is it relevant where the work was carried out and also where the sales are being invoiced to (ie the UK or overseas). I hope that all made sense!

Comments

  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Output VAT on work done outside of UK

    This situation can be a minefield and is one that a number of my clients face.

    You need to have a read of the place of supply rules to determine which country is deemed to be the place of supply.

    You seem to indicate that he is still in the UK and supplies his services to overseas customers in which case he will be subject to UK VAT for UK customers and outside the scope for non-UK customers.

    There are certain types of supply that are exceptions and classed under the place of belonging rules which will mean being VATable in the UK.

    I would recommend calling the Croner Helpline to discuss in detail your particular case (that is usually what I do) because they will email you with extracts from the legislation for your records.

    You may also want to read HMRCs VAT notice 741 which gives a lot of detail but is rather long-winded, 85 pages I believe..

  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Output VAT on work done outside of UK

    Thanks for that Dean. I have a really good VAT contact at PwC in Newcastle who has given me the answer, but I will probably ring Croner as well just to see what advice they would give.
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Output VAT on work done outside of UK

    Just out of interest..

    What did your PWC contact suggest?
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Output VAT on work done outside of UK

    I have to do German VAT and we get invoices for services from Germany which include VAT. My understanding is that goods are zero rated with in the EC but services are charged at the local rate of VAT. These services are provided in Germany at our head office for us in the UK. We reclain this vat on our annual return to Germany (I have also done this if Portugal for costs to refurbish tooling)

    So your client should charge VAT for services provided in the UK for clients in other EU countries and charge VAT at 17.5% I am not sure about services provided in the same country as the client but the VAT help line should be able to help you.
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Output VAT on work done outside of UK

    It's a bit more complicated than that.

    For services listed under paragraphs 1 to 8 of schedule 5 of the VAT Act, the place of belonging rules of the customer apply. The supply is outside the scope of UK VAT and the customer should account for VAT in their own country using the reverse charging procedure.

    Consultancy is one such term listed in paragraphs 1 to 8. It is not important where the services are physically carried out but where the customer belongs. If customer is UK, then charge VAT. If customer is outside UK then it is outside the scope.

Categories

Privacy Policy