VAT dilemma!!

[simpsonite]

Hi all,

My client is a non resident British Citizen. He works for a London based British Company. He is a consultant & carries out his supply of service in the Ukraine.
He invoices the British Company who in turn pay him gross.

Client is wondering whetehr he should be VAT registered or not.

I am fairly sure that he should be registered for VAT in the UK ( his income is well in excess of registration threshold).
Can anyone confirm this point for me?

thanks,

simpsonite

[pawncob]

He works in the Ukraine, so why should he register in the UK?

[simpsonite]

Pawncob,
Because the company he invoices is Uk based - is that not the point of supply for VAT purposes?

I thought the fact he works abroad is irrelevant?

You think he should be registered with the Ukraine authorities?

simpsonite

[simpsonite]

Hi all,

Relating to the same VAT query, can anyone also confirm that my client is liable to UK income tax on his Consultancy income.

He works in the Ukraine but invoices the UK based British company. As the British company pay him then i assume this is income arising in the UK and as such he is liable to UK tax?

Thoughts much appreciated,

Cheers

simpsonite

[SeanJames]

Hello,

In relation to the VAT aspect, you don't mention whether the British company is VAT registered or not?

Consultancy, is liable where the customer belongs to. So, despite the work being undertaken in the Ukraine, ultimately, if the customer is British then the place of supply is the UK (see section 13.5 & 12 Public Notice 741 - Place of Supply of Services)

Now, if the UK company is VAT registered, then they will receive the supply, and will be required to account for UK VAT under the reverse charge mechanism. Basically, they receive the invoice from your client and will self-account for UK VAT on this at the standard-rate. All fine.

However, where the British customer is not UK VAT registered, then the above can not happen, meaning that UK VAT is not being accounted for on the transaction, and as such, your client would be liable to UK VAT registration where their turnover exceeds £68000 over 12 months (see section 16.12.6 PN741 - section 16 as a whole deals with the reverse charge)

So, in recap, if the UK company is VAT registered, your client is fine, and can register on a voluntary basis, if the UK company is not registered, then your client will need to compulsory register and backdate to the month they exceeded the threshold)

Hope that helps.

Cheers
Sean

[pawncob]

When did the Ukraine join the EU?

If, as a UK supplier, you supply any of the services in section 13 to any person who belongs outside the EC,
that is supplies to business, non-business or private customers belonging outside the EC, your services are
supplied in your customer’s country and are outside the scope of UK and EC VAT. The place of supply of your
services is outside the EC.

Surely the corollary applies.