VAT on invoices

[Newbe]

Hi.

As briefly as possible:-
Got a contract via a Swiss based agency with a UK arm of a global IT Support company. Project is onsite in the UK, to a UK bank.
When sorting the contract, the agency said not to bill them with VAT, as they are based in Switzerland. I said surely that is wrong - my VAT Registered company was providing a service (through them) to another UK based company, and so VAT should be applied. They backed down, and put my rate +VAT on the contract, and said to bill their UK arm of their agency business. First invoice went in end March, to the agency address in the UK. They paid two weeks later (from Switzerland) - less the VAT! Have been chasing since for this, and they are now 'looking into it' with their legal team?!
I spoke to the HMRC VAT helpline. No use whatsoever, just directed me to a VAT Notice about 'Establishment Most Closely Concerned with Supply' to decide if VAT should be added or not - In my case the contract is with the Swiss company, but the service is for a UK company. Surely I therefore need to add VAT to my invoice? I do not want this to come back and hit me with a huge VAT bill in years to come, so need to get it sorted.
Any thoughts?

[northernladuk]

With regard to the ''Establishment Most Closely Concerned with Supply' they mention. In there is this.

The place of supply
For EU 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). There are a number of place of supply rules for working out where services of different kinds are supplied, for example:

where the place of supply of services is in a member state of the EU, that supply is subject to the VAT rules of that member state and not those of any other country. If the member state is not the UK, such supplies are said to be ‘outside the scope’ of UK VAT
where the place of supply of services is outside the EU, that supply is made outside the EU and is therefore not liable to VAT in any member state (although local taxes may apply). Such supplies are said to be ‘outside the scope’ of both UK and EU VAT
2.2 The impact on UK suppliers
If you belong in the UK and the place of supply of your services is the UK, you must charge any UK VAT due and account for it to HM Revenue and Customs (HMRC) regardless of where your customer belongs. If the place of supply of your services is another member state, you or your customer may be liable to account for any VAT due to the tax authorities of that country. See paragraph 2.9.

Where the place of supply of your services is outside the UK, you should ensure that your records contain sufficient factual evidence that this is the case.

If the place of supply of your services is outside the EU you should not charge UK VAT but, as you may need to account for the local tax, you’ll need to consider the tax rules of the country into which you are making your supply.

You are supplying your services in the UK so you would think that is your answer. Particulary when the 2nd to last paragraph talks about evidence. Not stepping foot out of the UK for a UK arm isn't going to be much defense I would have thought. That said ASB brings up a point about the Swiss Agent and what type of service in the link below.

http://forums.contractoruk.com/accou...-affected.html

Unfortunately it points you back at the VAT helpline.....

[VectraMan]

My understanding is that for eu/EEA customers if they supply you with a Vat number you don't charge Vat, but do include it on your Vat return under the relevant section. Place of supply is about the rate.

But you'll have to read the rules. Our ask your accountant.

[TheCyclingProgrammer]

Place of supply rules can be complicated.

If your contract is with the Swiss agency then the place of supply is likely to be Switzerland under the general rule for supply of services (it doesn't matter if the Swiss agency has an EU VAT number or not). In this case you would not charge VAT as it is outside the scope of UK VAT and if you're on the flat rate VAT scheme you wouldn't include this in your flat rate turnover.

You would need to report this sale on an EC sales list.

If you have invoiced their UK arm, presumably a UK limited company, then you have to charge VAT and they are obliged to pay it. Treat it like a bad debt if they do not pay. It may be worth checking that this is in your contract though. If the contract is with the Swiss company and the contract says nothing about the UK company they may well ask you to issue a credit note for the invoice you've already sent to the UK company and reinvoice the Swiss company instead.

IMO the fact that the end client is in the UK is not relevant here, unless your services are covered by any special place of supply rules that say otherwise. To the best of my knowledge normally IT consultancy services are covered by the general rule. You are supplying your services to the Swiss agency, not the end client. The general rule states that if you are supplying a business outside the UK, the supply is made where the customer belongs:

https://www.gov.uk/guidance/vat-how-...ly-of-services

[Lance]

My understanding is that for eu/EEA customers if they supply you with a Vat number you don't charge Vat, but do include it on your Vat return under the relevant section. Place of supply is about the rate.

But you'll have to read the rules. Our ask your accountant.

This makes sense. When I buy goods from the EU, I provide my GB VAT number and they drop the sales tax from the bill. Even though I was FRS at the time

I suggest the OP seek professional advice but in the meantime do as VectraMan suggests with your Swiss agents VAT number.

[TheCyclingProgrammer]

This makes sense. When I buy goods from the EU, I provide my GB VAT number and they drop the sales tax from the bill. Even though I was FRS at the time

I suggest the OP seek professional advice but in the meantime do as VectraMan suggests with your Swiss agents VAT number.

Goods and services have different rules. OP does not need the agencies VAT number, just evidence that it's a B2B supply.

I hope you add UK VAT on to your EU purchases when you do your VAT return.

[SueEllen]

Goods and services have different rules. OP does not need the agencies VAT number, just evidence that it's a B2B supply.

I hope you add UK VAT on to your EU purchases when you do your VAT return.

When I buy services from the EU I'm asked my VAT number.

[NotAllThere]

Slightly OT, but since banks can't reclaim the VAT they pay - is going through a Swiss agency tantamount to the bank dodging tax? The work is being done by a UK based contractor working in the UK for a UK based end-client. If the agency were UK based, then VAT would be charged all along the chain.

I think you MUST add VAT.

[TheCyclingProgrammer]

When I buy services from the EU I'm asked my VAT number.

Yes, it's fairly common but HMRC and EU rules clearly state it isn't required. You would still remove the VAT if selling services to a non VAT registered business as long as you had some evidence of them being a business.

Goods on the other hand should only be zero rated if you have the customers VAT number.

[TheCyclingProgrammer]

Slightly OT, but since banks can't reclaim the VAT they pay - is going through a Swiss agency tantamount to the bank dodging tax? The work is being done by a UK based contractor working in the UK for a UK based end-client. If the agency were UK based, then VAT would be charged all along the chain.

I think you MUST add VAT.

If the place of supply is Switzerland then OP should not charge VAT.

It is vital OP correctly establishes the place of supply but it is usually where the client (the agency) belongs. See section 4:

https://www.gov.uk/government/public...-services#sec4

In order for UK VAT to apply you would need to show that the agency's UK branch is the one most closely connected to the supply. The end client location is irrelevant here IMO as they are not the ones OP is making a supply to. If all dealings and contracts are with the Swiss branch exclusively then I'd say the place of supply is Switzerland. If OP normally deals with the UK branch then there is a case to be made that the UK branch is the one most closely connected and therefore UK VAT is chargeable.

The UK client will be invoiced by the Swiss agency for their services and the UK client will have to account for UK VAT on these invoices under the reverse charge.