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New contract with Consultancy with Irish entity

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    New contract with Consultancy with Irish entity

    Hi,

    I've recently won a contract with a UK client dealing through a consultancy based in London, with their PS services entity out of Ireland. The contract is outside IR35.

    When the company send their self billing invoice it's from the Ireland entity of their business and therefore is not applicable to UK VAT. This is because it's a B2B arrangement between my company (UK) and theirs (theirs being based in Ireland hence UK tax doesn't apply).

    I've checked and it does seem legit but means the invoices I have to generate for the FreeAgent accounting system will not include any VAT. In 10 years of contracting it's the first time i've had this arrangement, and whilst I get it, I wonder if this would be frowned apon in a VAT investigation.

    My question is... is this not as unusual as it seems? Do other consultancy's do this to save their client some money? Should I be worried that I won't be charging VAT on my invoices, or is this completely on the consultancy?

    Many thanks

    #2
    This is perfectly normal.

    When I was working with various clients in Ireland on and off from 2011-2015 I used to generate zero rated VAT invoices. You used to have to submit an EC Sales List (VAT 101) although I can see that this guidance was withdrawn in January this year - see https://www.gov.uk/guidance/vat-how-...-your-eu-sales.

    Comment


      #3
      Originally posted by ShandyDrinker View Post
      This was perfectly normal pre-Brexit
      FTFY.

      Read this Accounting for VAT on services between the UK and EU member states from 1 January 2021 - GOV.UK (www.gov.uk)


      UK businesses will no longer be able to use the VAT MOSS system in the UK and the current EU-wide VAT threshold for supplies of digital services to consumers will cease to apply to UK businesses. This means that EU VAT will be due on all supplies of digital services to EU consumers, regardless of the value of the sales.
      See You Next Tuesday

      Comment


        #4
        Originally posted by ShandyDrinker View Post
        This is perfectly normal.

        When I was working with various clients in Ireland on and off from 2011-2015 I used to generate zero rated VAT invoices. You used to have to submit an EC Sales List (VAT 101) although I can see that this guidance was withdrawn in January this year - see https://www.gov.uk/guidance/vat-how-...-your-eu-sales.
        Thanks for the info. Did your accountant have any issues? I’ve checked and the contract is with the Irish entity of the consultancy, so assume it’s all within the rules, even though it feels unusual.

        Comment


          #5
          Originally posted by MrBigG View Post

          Thanks for the info. Did your accountant have any issues? I’ve checked and the contract is with the Irish entity of the consultancy, so assume it’s all within the rules, even though it feels unusual.
          Apologies for the delayed reply as I've only just seen your post.

          There was no issue accountancy wise although there was of course the hassle of dealing with cross currency transactions and potentially exchange rates fluctuations.

          Unfortunately it will still be up to you to do your due diligence in respect of the entire supply chain to ensure HMRC can't skewer you at a later date.

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