Working in the UK for a Swedish Company and VAT

[Adamra]

Hi All

I started trading on the 1st of April. I worked for a Swedish company and then started contracting to cover a maternity period.

the set up is as follows. the Swedish company have a uk arm with whom I was employed with. the UK business is independent of my contract now and I have a contract in place with the Swedish company.

whilst sending the Swedish company an invoice from one of our suppliers, they said that there should be no vat on the invoice and that hey don't pay vat. now obviously this has implications for me in the sense that I am vat registered and intend to put vat on my invoices.

how can I handle this with the company, is there any rule/law that says they have to pay me the vat as a contractor based in the UK?

any advise, or comments welcome. any clarification required please let me know

Regards

[TheCyclingProgrammer]

If you're contracted with and invoicing a Swedish company for professional services then this would be outside the scope of UK VAT as the place of supply is almost certainly where the client belongs; the Swedish company should apply the reverse charge to your invoice (i.e. they account for VAT at their end).

Your invoice should not include VAT (its not a zero rated supply so I wouldn't even include a VAT line) and you should include a notice that the reverse charge applies.

You may also have to report these invoices on a EC sales list.

[ASB]

It can be worthwhile contacting the vat help line. But as tcp say it should be outside the scope and dealt with at their end by reverse charge.

years ago I was eventually told not to include these sorts of transactionson the ec sales list.

if on frs it is important that it is outside the scope. Otherwise if on frs it is part of the vat turnover and frs percentage would need to be paid.

there is a possible complication with the operation having a uk operation. However provided the uk end is not the ultimate consumer of the services it should be fine. Intra country vat can be a bit nightmarish.

[SandyD]

Thanks all, I managed to find out from other contractors.. so basically on the invoice I need to declare VAT subject to reverse charge (add non UK VAT of the company you are invoicing )
Then submit 0 VAT for HMRC

Was told this means high risk of being investigated by HMRC as well, but this is the way it is.

[northernladuk]

Was told this means high risk of being investigated by HMRC as well, but this is the way it is.

I wouldn't pay much head to this. Why would HMRC want to investigate you if this is the process you have to follow? That doesn't make sense.

Don't worry about being investigated. Keep your nose clean, do as the process directs and get on with plenty of invoicing.

[TheCyclingProgrammer]

Thanks all, I managed to find out from other contractors.. so basically on the invoice I need to declare VAT subject to reverse charge (add non UK VAT of the company you are invoicing )
Then submit 0 VAT for HMRC

Was told this means high risk of being investigated by HMRC as well, but this is the way it is.

Not sure where you've heard that. Not reporting an out of scope sale on your VAT return (which is the correct procedure on the FRS) would not increase the chance of an investigation. HMRC wouldn't even know. If they did a random VAT inspection all they would want to see is your invoices and evidence that the supply was out of scope (for services, you just need to show that the client was a business outside the UK; if you have their EU VAT number even better but it's not essential).

However, unlike ASB, my understanding is that you are supposed to report these supplies on an EC Sales List so you might want to check that with the HMRC VAT helpline.

[m0n1k3r]

Thanks all, I managed to find out from other contractors.. so basically on the invoice I need to declare VAT subject to reverse charge (add non UK VAT of the company you are invoicing )
Then submit 0 VAT for HMRC

Was told this means high risk of being investigated by HMRC as well, but this is the way it is.

It doesn't. 75% of my invoices are this way and I have only had a VAT inspection once - 11 years ago.