Postby Inovat » Fri Nov 27, 2009 11:39 am
The trouble is, of course, that you will be 17.5% more expensive (or less profitable, if you absorb the hit).
Wouldn't the content of the websites you design usually be clear evidence for the nature of the customer? For example, if they are promoting their business or even trading online, but have no EC VAT registration number, this would seem to clinch the Reverse Charge status. If you combine that with a question in your due diligence in which the customer confirms that the website is used for business purposes and acknowledge the Reverse Charge, would that provide sufficiently reasonable certainty?
Looking at it another way, you can charge the price the customer is willing to pay (whatever that is). If you put aside (in an interest-bearing account) the UK VAT element, at least you are not DEFINITELY paying over UK VAT to HMRC. If there is an error, you can pay over the UK VAT due for that particular error. Provided you have good evidence to show you acted reasonably, tried to do the right thing, and co-operated fully with HMRC, then there should be no penalty from HMRC either. But crucially, for those supplies which HMRC agree are Reverse Charged correctly, you get to keep the cash!
Hope it helps?
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All comments are made based on few facts. Formal paid advice should be sought.