US client, UK based work so apparently zero rated for VAT

[tolland123]

Hi all,

I am billing a US client for work carried out in the UK on systems in the US, according to the general rule the place of supply is the place where the customer belongs and therefore the services are not subject to UK vat.
(I am not 100% sure of this, but I spoke to my accountant and they said don't charge VAT, but the regs are hard to fathom)

Anyway, I am registered for VAT, so my return is basically going to have no output VAT and only input VAT on supplies, and therefore result in on-going negative VAT payments...

Is that correct and reasonable under the rules?

Has anyone any experience of something similar?

Thanks,
T

[Craig@Clarity]

You don't charge VAT on your invoice to your US client as the place of supply is where the customer belongs. You can simply ignore this from your VAT return altogether as it is outside the scope of VAT.

HM Revenue & Customs: How to work out your place of supply of services for VAT

[tolland123]

so basically I will be claiming all my input VAT back, and always getting a VAT rebate from HMRC every quarter?

[Craig@Clarity]

Yes, assuming that is your only client for now and you're not on the flat rate VAT scheme

[ASB]

It may be worth giving the VAT helpline a ring and letting them know this is happening, they will make a not on your file (in theory) and then your records won't look so weird and perhaps encourage an investigation (HMRC don't really like to see changing patterns).

I was a net reclaimer for years, never had any problems with them except after the first couple of returns had gone in they rang me up simply to say "errrr, what's going on".

From a point of view of the FRS this is outside the scope of UK vat so does not count as FRS turnover, however I was NEVER able to get written agreement of this from the revenue so didn't join the FRS just in case thy decided they still wanted their percentage.

[Wanderer]

so basically I will be claiming all my input VAT back, and always getting a VAT rebate from HMRC every quarter?

Well, THAT'S never going to be investigated.

I agree with ASB, it might be worth talking to HMRC to put it on the record what's happening so they don't go getting suspicious that you are doing something dodgy. That said, if the amount of VAT reclaimed is fairly small then they aren't going to be that bothered...

[d000hg]

so basically I will be claiming all my input VAT back, and always getting a VAT rebate from HMRC every quarter?

That's basically how I've worked the last couple of years. In my VAT returns the total money through my company is listed as £X thousand per quarter, VAT-able income listed as £0, VAT due back as a few quid for office supplies, accountancy fees, etc.