VAT and working Offshore

[parviz]

I currently work as a Ltd company in the North Sea through a company based in Scotland.My annual turnover is between £70-£90k per annum.
I spoke with my accountant a while back about becoming VAT registered and after a discussion between him and the company he works fors, VAT man, i was advised that i was working out with the scope of charging VAT and hence would not need to become VAT registered.
Something about this has been bothering me though and i do not want to get a bog VAT bill + fine further down the line.
Can anyone share their thought on this matter?
Any help would be appreciated.

[Generix]

Need to clarify some facts first.

So your company is Scottish incorporated and based in Scotland?

Your work itself is on a North sea (oil rig presumably?)

What is the nature of the services you are providing and where is your customer established?

[parviz]

The company i work for is american, office based in scotland.They have a contract to provide services Shell.
I work through the office with the contract.
When i am offshore i am my own man and only report any concerns or work i have done offshore.I have no direct supervision either on or offshore.
The VAT specialist says that since i work outwith some 12 mile limit from shore (im based over 100 miles away)
and i have next to no expenses i do not have to charge VAT.

[Generix]

The company i work for is american, office based in scotland.They have a contract to provide services Shell.
I work through the office with the contract.
When i am offshore i am my own man and only report any concerns or work i have done offshore.I have no direct supervision either on or offshore.
The VAT specialist says that since i work outwith some 12 mile limit from shore (im based over 100 miles away)
and i have next to no expenses i do not have to charge VAT.

Sorry I'm still not getting the fact pattern clear here.

Are you self employed or are you employed by a company.

If the latter, is the company your private company which is being subcontracted in by the Amercan company or are you what I'd call 'properly employed' by a third party company?

There is a point re the 12 (nautical?) mile limit but I'm not sure it applies.

Is the 'VAT specialist' an accountant? Because (generally) those accountants which claim to be VAT specialists (all of them it seems) tend not to be what I'd class as a VAT specialist. No offense guys ;p

I still need to know exactly what services you are providing, and to whom. How are you paid? Do you invoice someone?

[parviz]

Sorry for not being clear.
I am self employed.
I invoice the company in scotland ( subcontracting me)for my services for carrying out work for the oil company on their rig.
I maintain and look after the rigs instrumentation.
My accountant consulted a VAT specialist (not accountant)

[Generix]

Sorry for not being clear.
I am self employed.
I invoice the company in scotland ( subcontracting me)for my services for carrying out work for the oil company on their rig.
I maintain and look after the rigs instrumentation.
My accountant consulted a VAT specialist (not accountant)

I guess this would fall as work on a non-moveable property and falls within Art 47 of CD 2008/08/EC

Therefore the place of supply is where property is located, if that is outside the UK then no UK VAT applicable.

Might also be argued that if you were working on a peice of machinery on the rig rather than something that is part of/affixed the rig itself this would be supplied where the customer is established and therefore subject to UK VAT (assuming you are based in the UK/are UK resident). [Unlikely just throwing this out there]

[harrypig]

There is a point re the 12 (nautical?) mile limit but I'm not sure it applies.

I'm no expert, far from it but remember doing my self assesment for the likes of FED and the 12 mile limit comes into that, ie you need to be 12 miles or more out before midnight to claim that as a qualifying day.

This was a few years ago I done this, was investigated a number or times but was happy with what I was submitting so never a problem.

Wouldn't have thought this would have anything to do with VAT, at the end of the day the Vat man wants his piece and what he wants...he gets

[Generix]

There is a point re the 12 (nautical?) mile limit but I'm not sure it applies.

Wouldn't have thought this would have anything to do with VAT, at the end of the day the Vat man wants his piece and what he wants...he gets

Yeah the 12 (or whatever mile limit is) comes into play due to the place of the supply of services being where the oil rig is situated, so if its within the UK (VAT) territorial waters then its within the Uk and VAT to be applied, otherwise its outside and no VAT applied.

[parviz]

Thanks for the replies.
Since i started this thread, i have spoke to the VAT specialist who has mailed me out the legislation regarding this topic.
He is adamant that i do not require to be VAT registered, though because i am unsurei have decided to register for VAT for piece of mind.I have recieved in writing from both the accontancy firm and VAT specialist that i require not to be VAT registered.
If for whatever reason i was investigated and it was found i was given misinformation regarding this would they be liable to incur any penalty that i was given.I did ask to be registered a while back but as said have been told it wasn't needed.

[Lambs]

P,

I recommend that you listen to your advisors. HMRC will have no problem with your registering for VAT, because they'll base their registration on the information which you give to them - usually very limited, and their assumption will be that you wouldn't be registering for VAT unless you were supposed to.

It will be your fault if you register for VAT and it turns out that you shouldn't have done so, even if you had the best of intentions. (There is also the question of whether or not your client(s) might be able legitimately to reclaim your 'Output VAT' on their own returns. It is arguable that they should not, which would make your services very expensive in relation to your competitors, presumably).

To put it another way, 'purporting' to charge VAT when you're not actually making a taxable supply, is a very serious matter. I have no doubt you'd be doing so in good faith, but if it were subsequently found that you shouldn't have registered for VAT and had been accurately advised of that, then you might have some difficult questions to answer. And any input tax claimed might be in doubt.

If you have any misivings as to the advice you have received, I should recommend that you first contact your local tax office, ( I have given up on the national VAT helpline of late ), so that you will have something in writing to which you can refer in fugure if necessary. Explain the cause for the uncertainty. If they confirm that you should not be registered, then great. If not, then query this with your advisors.

A quick look at G's advice seems to be in order to me, although I have no experience of VAT in the context of offshore rigs.

In fact, and just to complicate matters further, you might actually be eligible to register for VAT on a voluntary basis, although your supplies mightn't actually be taxable supplies from a UK VAT perspective.

Regards,

Lambs