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Where Taxpayers and Advisers Meet

VAT invoice for sub contractor inside IR35 public sector

Posts: 6
Joined: Fri Jun 21, 2019 11:26 am

VAT invoice for sub contractor inside IR35 public sector

Postby taxz » Sat Oct 12, 2019 11:06 am

I have a subcontractor who will be working for my public sector client inside IR35.

The subcontractor wants to paid via his limited company, and we will consider his company a supplier and have a contract between us, even though he's considered an employee for tax and NI purposes. We understand that we must deduct NI and PAYE before paying him, and that his invoice demand and payment for same will not match, as tax etc is deducted.

Should he add VAT on his invoice? (my gut feel is no)
Or does his invoice (without VAT) become the equivalent of a timesheet submission - a confirmation of time worked? (gut feel yes!)

Posts: 2958
Joined: Wed Aug 06, 2008 4:01 pm

Re: VAT invoice for sub contractor inside IR35 public sector

Postby robbob » Sat Oct 12, 2019 1:26 pm

the subcontractor will add vat to the invoice (presuming they are vat registered and the service is standard rated) as they would do as if the invoice were not IR35 related - the IR35 entries don't really impact the vat situation if the bill is from them as sole trader/their company.

Note you do need to be certain this is actually i35 billing and not him actually having being swapped directly onto the company payroll!

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