Postby Nigel Lord » Thu Oct 09, 2003 8:26 am
The answer depends on who is receiving the consultany - a business, or someone not in business.
If the consultancy is to a non-business entity, the EU supplier should charge VAT at the local rate (which could be good news or bad news depending on which country we are talking about).
If the recipient is a business, the supplier should not charge VAT. Instead the recipient business has to account for a "reverse charge". This means charging VAT to yourself, and recovering the VAT (subject to partial exemption restriction) on the same VAT return. Provided you are able to fully recover your VAT on costs there is no real cost in either real or cash flow terms.
An important point is that the value of the reverse charge counts towards the VAT registration limit for non-registered businesses. There may be an issue with some EU consultants if you claim to be a business but can not provide them with a UK VAT number.
If you require any further assistance please do not hesitate to contact us, and we will be happy to act on your behalf.
Nigel Lord
Lord Associates
Taxation & Business Consultants
Caxton House
Old Station Road
Loughton
Essex, IG10 4PE
020 8418 9101 & 07769 931852