UK Limited company providing outside IR35 services to a European country based client

[Platypus]

No VAT charged. The sales still get reported on your VAT returns but if the proper treatment is applied by your accounting software it will all be fine. My accountant didn't raise any issues or concerns when doing my year end accounts.

Hi can I you ask a follow-up question on this point please? I have asked my accountant but I'm waiting for a reply.
I noticed yesterday that "Box 6" on my filed VAT returns is zero. I invoice a Swedish company in EUR. I use FreeAgent.

I did ask ChatGPT about this last night (no slagging me off for this please). It says that my supply is outside of scope of UK VAT, and therefore "some accounting packages may not include outside scope sales in Box 6". Hence the zero value. In FreeAgent I do classify my sales as " Out of scope of VAT".

I'm curious if you treat your VAT any differently from me? Which might explain why your Box 6 "Total value of sales and all other outputs excluding any VAT" includes your sales. Thanks!

[jamesbrown]

Hi can I you ask a follow-up question on this point please? I have asked my accountant but I'm waiting for a reply.
I noticed yesterday that "Box 6" on my filed VAT returns is zero. I invoice a Swedish company in EUR. I use FreeAgent.

I did ask ChatGPT about this last night (no slagging me off for this please). It says that my supply is outside of scope of UK VAT, and therefore "some accounting packages may not include outside scope sales in Box 6". Hence the zero value. In FreeAgent I do classify my sales as " Out of scope of VAT".

I'm curious if you treat your VAT any differently from me? Which might explain why your Box 6 "Total value of sales and all other outputs excluding any VAT" includes your sales. Thanks!

You must enter the total value of all sales in Box 6 of your VAT return, including all supplies that are outside of the scope of UK VAT:

https://www.gov.uk/guidance/how-to-f...70012#section3

I think there are various ways to set the VAT options for a supply in FA, notably via the bank transaction or the invoice. Personally, I find the easiest way is to set this in relation to a Contact. Create or edit a Contact and then select an appropriate option to "never" charge VAT or "only charge VAT if they are based in the UK VAT area" (ensuring the contact address is outside), something like that.

Either way, Box 6 must include the total value of sales. That being said, I think you can correct this on your next return because it has zero impact on the amount of VAT due, which is £0. Had there been a non-zero and non-trivial (I think >1% of total value, but I forget) impact, you would need to file an amended return, but no bother in this case, I think. Confirm with your accountant.

[jamesbrown]

( Oh, and to be clear, Box 6 is always correct when I file my VAT returns that contain supplies that are outside of the scope of UK VAT, so it is not a general problem with FA. )

[ladymuck]

Hi can I you ask a follow-up question on this point please? I have asked my accountant but I'm waiting for a reply.
I noticed yesterday that "Box 6" on my filed VAT returns is zero. I invoice a Swedish company in EUR. I use FreeAgent.

I did ask ChatGPT about this last night (no slagging me off for this please). It says that my supply is outside of scope of UK VAT, and therefore "some accounting packages may not include outside scope sales in Box 6". Hence the zero value. In FreeAgent I do classify my sales as " Out of scope of VAT".

I'm curious if you treat your VAT any differently from me? Which might explain why your Box 6 "Total value of sales and all other outputs excluding any VAT" includes your sales. Thanks!

What JB said.

You made me panic a bit in case I'd missed something so I checked my FA VAT returns and am happy to see my USD invoices to a Swiss client are being reported in Box 6.

They are NOT reported in Box 1, as I'd expect.

Also as JB says, there's a setting in the Contact under Invoicing Options where you set the 'Charge VAT' option to 'Only if contact is also based in the United Kingdom VAT area', and make sure the billing address is not in the UK.

It's also worth checking the Invoicing options - under More Options are three VAT options and this should be set to 'UK VAT Rates' unless you have good reason to change it to one of the other two.

These combined should ensure that your non-UK sales are reported in Box 6.

[Platypus]

Thanks JB and LM.

Oh boy...

I can see that the figures used to be reported in Box 6, a couple of years ago, but not since I changed my accountant. The change was forced when my old accountant passed away very suddenly.

oh dear oh dear, here begins a big mess since I've been asked to show my VAT returns to comply with JSL, and zero value in Box 6 doesn't look good to that end.

Thanks again, now at least I know I have a problem.

[ladymuck]

Thanks JB and LM.

Oh boy...

I can see that the figures used to be reported in Box 6, a couple of years ago, but not since I changed my accountant. The change was forced when my old accountant passed away very suddenly.

oh dear oh dear, here begins a big mess since I've been asked to show my VAT returns to comply with JSL, and zero value in Box 6 doesn't look good to that end.

Thanks again, now at least I know I have a problem.

Good luck!

[jamesbrown]

Thanks JB and LM.

Oh boy...

I can see that the figures used to be reported in Box 6, a couple of years ago, but not since I changed my accountant. The change was forced when my old accountant passed away very suddenly.

oh dear oh dear, here begins a big mess since I've been asked to show my VAT returns to comply with JSL, and zero value in Box 6 doesn't look good to that end.

Thanks again, now at least I know I have a problem.

OK. Speak to your accountant first. You are paying them to not make these basic errors (honestly, I would be pretty angry, although the ultimate responsibility rests with you), so they will need to fix the error.

Technically, you may still be able to correct this in your next VAT return, although I am not 100% sure about that and, in any case, I wouldn't recommend it based on what you've said.

At this point, you are more likely to receive a compliance check because the Box 6 figure is a point of verification against your CT return. Correcting this in the next return is even more likely to trigger a check. Regardless, it would be better to pre-empt this with a formal disclosure. You can make a formal disclosure via the HMRC portal. As I said, there should be no practical consequences, as you will not owe any VAT on supplies that are outside of the scope of UK VAT, but it is better to disclose the error transparently.

[Platypus]

Thanks again JB, yes I'm pretty cross about this mistake and spoke to my accountant this morning. But they reassured me there wouldn't be any penalties to pay (ironic I thought since they made the mistake) !!!

The compliance thing is the biggie now, this has the potential to throw a spanner in my works. Another issue is that the "compliance team" that sits between me and the end client are offshore with absolutely no clue about UK accounting practices or HMRC regs.

Have a great weekend!

[jamesbrown]

Thanks again JB, yes I'm pretty cross about this mistake and spoke to my accountant this morning. But they reassured me there wouldn't be any penalties to pay (ironic I thought since they made the mistake) !!!

The compliance thing is the biggie now, this has the potential to throw a spanner in my works. Another issue is that the "compliance team" that sits between me and the end client are offshore with absolutely no clue about UK accounting practices or HMRC regs.

Have a great weekend!

If you can point to a disclosure and correction in progress, it may not be a big deal for that either, but IDK. Perhaps eek has a better idea.

You have a good weekend too