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Where Taxpayers and Advisers Meet

Outside of scope or zero rated?

Nonimous
Posts:83
Joined:Thu Jul 16, 2009 12:39 pm
Outside of scope or zero rated?

Postby Nonimous » Tue Sep 28, 2021 10:45 am

HMRC guidance is really not clear here

Potential new client has newly started a consultancy business. He expects turnover of around £120,000 per year. However, only £30,000 of this is to UK customers and the rest is to overseas businesses. It does not sound like any of the work is the kind of thing that would be subject to UK VAT regardless of the business customer being in the UK

Query is, therefore:

- is it outside the scope and thus he does not need to register?
- or is it zero-rated and so he does?

Nonimous
Posts:83
Joined:Thu Jul 16, 2009 12:39 pm

Re: Outside of scope or zero rated?

Postby Nonimous » Tue Sep 28, 2021 10:46 am

Should have added that his expenses are minimal so no point in registering to get input VAT back

robbob
Posts:3149
Joined:Wed Aug 06, 2008 4:01 pm

Re: Outside of scope or zero rated?

Postby robbob » Tue Sep 28, 2021 6:58 pm

HMRC guidance is really not clear here
Personally i would not make any decisions without consulting 741A - i am guesing you have done teh "necessary"

https://www.gov.uk/guidance/vat-place-of-supply-of-services-notice-741a#sec15

That guide is kinda clear (albeit it may be hard to find !) if its B2B services under general rule with customer belonging outside the UK supply is "outside the scope of uk vat"
2. Background to place of supply of services
2.1 The place of supply
For VAT purposes, the place of supply of a service is the place where that service is treated as being supplied. This is the place where it’s liable to VAT (if any).
If the supply is in the UK it is subject to UK VAT. If the supply is in an EU member state or another country it is said to be ‘outside the scope’ of UK VAT.

and
3. Place of belonging
3.1 Introduction
The place where a supplier or customer belongs will determine where the service is supplied and who accounts for any VAT due in the following cases:
B2B general rule services: supplied where the customer belongs (see paragraph 6.3)
Ref rgistration no need to register - there is potential to vat register and claim back input vat presuming you would be able to do so had those services been provided in the uk - something along those lines


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