VAT on non EU invoice?

[damyarn]

Just looking for clarification. If I do some work for a non EU client (Australian) under a contract to bill them at a sterling rate I do not need to include VAT as delivery is outside the EU? Just need to state 0 rate for VAT on the invoice?
Is this correct even if I do the work from here in the UK?

[Platypus]

Yes correct.

It's zero rated, not exempt

P.S. have to add, of course, that if you'd searched the forums, you'd have found the answer

EDIT:
http://forums.contractoruk.com/accou...ml#post1314351

[Martin at NixonWilliams]

Just looking for clarification. If I do some work for a non EU client (Australian) under a contract to bill them at a sterling rate I do not need to include VAT as delivery is outside the EU? Just need to state 0 rate for VAT on the invoice?
Is this correct even if I do the work from here in the UK?

The services provided are outside the scope of UK VAT. VAT should therefore not be included on your invoice.

Note that the place of supply rules are concerned with the place the customer belongs, where the work is performed is not important.

I hope this helps

Martin

[Martin at NixonWilliams]

It's zero rated, not exempt

The supply would be outside the scope of UK VAT - zero rated supplies are very different

This is especially important to know if your company is registered under the flat rate scheme as one is subject to VAT being paid to HMRC (zero rated supplies) and the other does not (outside the scope supplies).

[moggy]

The supply would be outside the scope of UK VAT - zero rated supplies are very different

This is especially important to know if your company is registered under the flat rate scheme as one is subject to VAT being paid to HMRC (zero rated supplies) and the other does not (outside the scope supplies).

If only he had searched the forums...

[jamesbrown]

Yes correct.

It's zero rated, not exempt

P.S. have to add, of course, that if you'd searched the forums, you'd have found the answer

EDIT:
http://forums.contractoruk.com/accou...ml#post1314351

Concur with Martin, it's almost certainly outside of the scope of UK VAT. The invoice should state that it's outside of the scope of UK VAT and it should not make any other reference to VAT. In that case, it is not factored into any calculations (such as FRS) to which VAT would otherwise apply. By "almost certainly", I mean that you should clarify your position w/r to the place of supply rules. In general, if the client is based outside the EU and they benefit from your services in their own country (as opposed to the UK), it will be outside of the scope of UK VAT. There are various complexities though.

[TheCyclingProgrammer]

Just looking for clarification. If I do some work for a non EU client (Australian) under a contract to bill them at a sterling rate I do not need to include VAT as delivery is outside the EU? Just need to state 0 rate for VAT on the invoice?
Is this correct even if I do the work from here in the UK?

As others have mentioned, this would almost certainly be outside the scope of UK VAT, although it does depend on what the invoice is for. For professional consultancy services or electronically supplied services (e.g. software) it would be outside the scope because the place of supply will be where the client belongs. There can be exceptions to this subject to use and enjoyment provisions for certain supplies so you may want to check with your accountant and HMRC guidance to be certain.

You don't even need to mention VAT on the invoice and the invoice won't appear on your VAT return either.

One caveat for future reference: if the client was in the EU, it would still be outside the scope of UK VAT however the client would have to account for the VAT under the reverse charge mechanism and you would probably have to fill out an EC Sales List.

Finally: make sure whatever software you're using to manage your books and your VAT account recognises the difference between zero-rated, exempt and out of scope supplies particularly if you're on the flat rate scheme because, as Martin says, zero-rated and exempt supplies are included in your flat-rate turnover but out of scope supplies are not. The supply should not figure in your VAT calculations at all.

[ASB]

There is a tiny potential fly in the ointment. There are a few exceptions to the place of supply. If the services are related, for example, to uk property then the supply is in the UK and that makes it vatable I think.

It is exceedingly unlikely the services in question will fall into one of these categories, but it is possible.

[TheCyclingProgrammer]

There is a tiny potential fly in the ointment. There are a few exceptions to the place of supply. If the services are related, for example, to uk property then the supply is in the UK and that makes it vatable I think.

It is exceedingly unlikely the services in question will fall into one of these categories, but it is possible.

Yes...one example might be, if you're selling software to a US company but they are buying it to be used in their UK offices, then the use and enjoyment provisions would likely mean that the supply is liable to UK VAT, even if its the US company you're billing (this essentially prevents the US company from avoiding VAT by buying it instead of getting their UK subsidiary to buy it).

[Martin at NixonWilliams]

Yes, property and the supply of software have different rules.

Luckily for contractor accountants like us, the place of supply rules behind consultancy supplies are reasonably straightforward!