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Hiring offshore developers

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    Hiring offshore developers

    Has anyone had any experience with this? How does the VAT situation work? Obviously I charge VAT in UK but if they charge me VAT - is that deductable?

    #2
    Originally posted by cannon999 View Post
    Has anyone had any experience with this? How does the VAT situation work? Obviously I charge VAT in UK but if they charge me VAT - is that deductable?
    Why would they be charging you VAT?

    But UK VAT charged on inputs is deductable.
    merely at clientco for the entertainment

    Comment


      #3
      Originally posted by eek View Post

      Why would they be charging you VAT?

      But UK VAT charged on inputs is deductable.
      If they are incorporated they will probably have to charge some sort of tax as per their country's laws. VAT is not just a UK thing.

      Comment


        #4
        Originally posted by cannon999 View Post

        If they are incorporated they will probably have to charge some sort of tax as per their country's laws. VAT is not just a UK thing.
        I don't think anywhere in the world charges VAT on exports - but none UK VAT is not an input tax you can recover. So if they are charging you say Bulgarian VAT you are not going to be able to recover it and their prices have just gone up 20%...
        merely at clientco for the entertainment

        Comment


          #5
          Originally posted by eek View Post

          I don't think anywhere in the world charges VAT on exports - but none UK VAT is not an input tax you can recover.
          That's what I was asking and I am coming to the same conclusion based on the research. I have directed this question to my accountant but a second opinion is always welcome - thank you.

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            #6
            If they are in the EU, then they shouldn’t be charging you VAT as it would be a reverse charge supply due to it being a B2B transaction but they may want to see your VAT number first (not strictly required but common across the EU).

            As a consequence you will account for the VAT yourself using the reverse charge scheme and the input VAT will be recoverable.

            Countries outside the EU will not charge you VAT but may have their own sales taxes. Services supplied from any country outside the EU should also be accounted for using the reverse charge scheme.

            Comment


              #7
              Originally posted by TheCyclingProgrammer View Post
              If they are in the EU, then they shouldn’t be charging you VAT as it would be a reverse charge supply due to it being a B2B transaction but they may want to see your VAT number first (not strictly required but common across the EU).

              As a consequence you will account for the VAT yourself using the reverse charge scheme and the input VAT will be recoverable.

              Countries outside the EU will not charge you VAT but may have their own sales taxes. Services supplied from any country outside the EU should also be accounted for using the reverse charge scheme.
              They are not in the EU. What in the world is a reverse charge scheme lol, my accountant have not mentioned this

              Comment


                #8
                Originally posted by cannon999 View Post

                They are not in the EU. What in the world is a reverse charge scheme lol, my accountant have not mentioned this
                The reverse charge is how you account for VAT on all purchases of services from outside the UK where the place of supply is the UK. You need to treat the service as if you both supplied and received it for VAT purposes. You should already be doing this if you purchase anything like software or web based services from outside the UK.

                Comment


                  #9
                  Originally posted by TheCyclingProgrammer View Post

                  The reverse charge is how you account for VAT on all purchases of services from outside the UK where the place of supply is the UK. You need to treat the service as if you both supplied and received it for VAT purposes. You should already be doing this if you purchase anything like software or web based services from outside the UK.
                  Accountant has confirmed this, thank you.

                  Do you know if there is any particular legislation to do with hiring offshore developers I should be aware of? Is it really as simple as striking a contract with an offshore company and just putting that down as as an expense?

                  Comment


                    #10
                    Just out of interest.. Why do they have to be offshore?
                    'CUK forum personality of 2011 - Winner - Yes really!!!!

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