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Where Taxpayers and Advisers Meet

VAT Flat Rate Sheme & Supplying service to EU

mycobra
Posts:3
Joined:Wed Dec 23, 2009 12:54 pm
VAT Flat Rate Sheme & Supplying service to EU

Postby mycobra » Wed Dec 23, 2009 1:20 pm

My company supplies a consultancy service to a company (Employment Agency) registered in the Republic of Ireland.
I supply my service in the UK.
My company is a UK VAT registered Ltd company.

My supply falls within:
Notice 741 – section 13 and 13.5 (Consultancy service)

Therefore from Section 12 which will detail my company's supply as outside scope of UK VAT as my customer is ROI.

Okay, so I don't think I can charge VAT, correct?

Now, my company is presently under the VAT Flat Rate Scheme.

Will I have to pay VAT on this supply, even though I can't charge VAT?
Put another way: Will the value of this supply be included in the figure to which I apply the flat rate percentage (13%).

If this is the case my company will be out of pocket by about £1500. :oops:

Is there anything I can do to avoid this?

Conan

RAL
Posts:1064
Joined:Thu Oct 30, 2008 12:47 pm
Location:London & Surrey
Contact:

Re: VAT Flat Rate Sheme & Supplying service to EU

Postby RAL » Sat Dec 26, 2009 11:36 pm

As you said if it is outside of the scope of vat, then leave them out of your flat rate turnover.

The place of supply is where customer is based i.e. ROI. So you need to check whether you have an obligation to register for vat in Ireland. I am not an expert in Ireland vat. But I think the threshold is zero. So you have to regsiter for vat in Ireland and apply Ireland's vat.
RAL

mycobra
Posts:3
Joined:Wed Dec 23, 2009 12:54 pm

Re: VAT Flat Rate Sheme & Supplying service to EU

Postby mycobra » Tue Jan 05, 2010 6:01 pm

I've found the solution to my issue. See below

My company supplies a consultancy service to a company (Employment Agency) registered in the Republic of Ireland.
I supply my service in the UK.

There are special rules for Consultancy services and others that dictate that the customer's country is regarded 'place of supply'.
Notice 741 – section 13 and 13.5 (Consultancy service)
Okay, so it is outside the scope of VAT and therefore no VAT will be charged to the customer.

I was conncerned that I may still need to include this sale in the Flat Rate Scheme VAT return.
However, I've found the small print in the Flat Rate scheme which means I won't be charged VAT, see below:

HMRC Reference:Notice 733 (March 2007)
6.4 Special circumstances
Depending on the specific details of your business before you work out your flat rate turnover you may also need to take account of the following:
sells services to other Member States of the EU:

if your supplies are outside the scope of VAT, leave them out of your flat rate turnover.

This will depend on the place of supply of the services - see Notice 741 Place of supply of services.


I believe on the actual VAT return you include the sales figure in question in box 8, but it would not be included in boxes 1,3 or 6.

The invoice needs to detail the customers ROI VAT number and a notice 'Outside scope of UK VAT- customer to account for VAT’.

SeanJames
Posts:165
Joined:Sun Jan 18, 2009 10:13 am

Re: VAT Flat Rate Sheme & Supplying service to EU

Postby SeanJames » Thu Jan 07, 2010 9:27 am

Hello,

No, you do not include it in box 8 of the VAT return as it is not the sale of goods.

It is included in box 6 of your VAT return, but is not included in your FRS calculation.

Cheers
Sean


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