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Where Taxpayers and Advisers Meet

VAT on Export of Services

helg58
Posts:20
Joined:Fri Jan 16, 2009 11:24 am
VAT on Export of Services

Postby helg58 » Sat Dec 17, 2022 3:00 pm

Run small management consultancy, have some mandates from clients abroad, so no VAT due on that. But sometimes a partner firm gives help and they charge me for THEIR part of the job. As they are VAT registered I pay their share plus VAT on that. That leaves me out of pocket. I guess if I have enough clients where I charge VAT I will get this VAT back. But if not in an accounting period, is there a way to avoid this, Say total invoice to foreign client £20k, 5k goes to my partner firm in Uk, they will charge 5+1k VAT, so their service costs me £6k, any suggestions/experience with sim sit?

Trevor S
Posts:108
Joined:Tue Jan 01, 2019 12:37 am

Re: VAT on Export of Services

Postby Trevor S » Sat Dec 17, 2022 6:47 pm

Provided that
- the UK subcontractor is making their supply of services to you (rather than directly to your overseas client), and
- they issue a proper VAT invoice to you,
you can recover the VAT that they've charged.

See HMRC notice 700, section 10.2, second bullet point - which details the circumstances in which you can recover input VAT:
"supplies you make which are outside the scope of UK VAT but which would be taxable supplies if they were made in the UK"

Of course, if the majority of your business customers are overseas, there may be VAT return periods where the amount of VAT recoverable on your expenditure exceeds the amount of VAT payable on your charges to UK customers. This isn't a problem, just complete your VAT return as normal. But instead of you then having to pay HMRC, they will make a repayment to you.


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