VAT question

[d000hg]

I'm registered for VAT so my understanding is that VAT is payable on income from other parties in the EU, regardless of their VAT status, right?

But what about if I am paying freelancers based in the EU? If they don't charge me VAT on their invoice, this means I can't assume it is factored in and claim it back can I? If they don't mention VAT in their invoices I simply pay them what is billed and that's where it ends?

[PhilAtBFCA]

VAT question

Hi d000hg

Vat is not payable on income. Its chargeable by the supplier of the services. If there is no VAT, you cannot claim it back. You can also only claim UK VAT back on your UK VAT return.

So the answer to this is "it depends".

Basic guidance is on HMRC website

Two things are important:-

1. The VAT registration status of the parties
2. The "Place of Supply" which is where the services are received.

If you need a hand with ths feel free to PM me with more details.

Phil

[d000hg]

Hi d000hg

Vat is not payable on income. Its chargeable by the supplier of the services. If there is no VAT, you cannot claim it back. You can also only claim UK VAT back on your UK VAT return.

What I mean here is, since I am VAT registered aren't I obliged to charge VAT to my client if they're in an eligible country?

But my main question is about subcontractors I use who ARE based in the EU, who are billing me. I don't know their VAT status but I am wondering if it's up to them to charge me VAT, and if they don't explicitly include it on invoices if that automatically means there is no VAT to care about.

[PhilAtBFCA]

VAT in the eu

Hi d000hg,

I would read the HMRC gidance and check it with your exact circumstances but if your client is vat registered in their own country ( you need to get their vat number )then you wont be charging them vat for your services.

Likewise if your subcontractors have your vat number ( they need this ) they wont be charging you vat. If they do you wont be able to claim it in the uk.

Hope thats clearer !

Phil

[Sockpuppet]

Basically if they can give you a valid VAT number and they are an EU member state then you don't need to charge them VAT. If you can supply them one they they don't need to charge you VAT.

You can check VAT numbers here: http://ec.europa.eu/taxation_customs...tedLanguage=en

[d000hg]

Basically if they can give you a valid VAT number and they are an EU member state then you don't need to charge them VAT. If you can supply them one they they don't need to charge you VAT.

Oh I never knew that... is that basically to save the VAT money being sent through crazy-length chains, HMRC just figure out the initial source of the money?


But my issue is with my sub-contractors who are almost certainly not VAT-registered, and if there's any kind of impact on me dealing with non-registered people when they charge me - these are more like students doing some work on the side which I doubt they will declare to the taxman.

[Sockpuppet]

Oh I never knew that... is that basically to save the VAT money being sent through crazy-length chains, HMRC just figure out the initial source of the money?


But my issue is with my sub-contractors who are almost certainly not VAT-registered, and if there's any kind of impact on me dealing with non-registered people when they charge me - these are more like students doing some work on the side which I doubt they will declare to the taxman.

No. Instead of trying to reclaim VAT from within the EU they basically said that all vat will be paid by the first taxable individual that it reaches (i.e. not vat registered person).

If they are not VAT registered then they cannot charge VAT.

If they are in the UK then pay them through PAYE. If they are not then I'd be worried that you'd get collared for the tax that you would be liable for as they could be seen as employees.

[MPwannadecentincome]

So if you are on flat rate VAT and you bill your client in Europe who has a VAT number and lets say in the financial year this was the only client - do you gain or lose?