Are Investment Banks VAT exempt?

[northernladuk]

I wonder if there is more to this as there usually is with quesitons like this.

[GB9]

I wonder if there is more to this as there usually is with quesitons like this.

Good point.

Never worked for an investment bank, but last time I checked, retail banks can't reclaim VAT. You still charge it to them though and they still have to pay it.

[SarahL2012]

Hi,

I am currently in a perm software developer position and got a contract offer from an investment bank and they say I cannot charge them VAT because they are VAT exempt. They also say I will have to use Limited company to provide them with services and I cannot go via Umbrella company/PAYE.

Is this the normal practice with investment banks? Please advise.

Thanks in advance.

A few years ago I worked in a Life Assurance company who were trying to tell all of their contractors that they shouldn't be charging them VAT. The company couldn't recover their VAT because most of the services they were selling were either exempt or zero rated, so contractors were effectively 20% more expensive to them than their headline day rate.

Their argument was that the services that the contractors Limited Companies were providing were exempt services, NOT the provision of staff.

I think they backed off in the end when a number of contractors contacted HMRC directly for advice.

I've done a lot of work in Financial Services over the past couple of years and never come across that argument since.

I think the relevant HMRC bit is notice 700/34, but google might help with more ideas.

[TheBakingSysAdmin]

Charity VAT exemption certificates

Many moons ago I worked for the University of Edinburgh. Since universities have charity status, we had VAT exemption. But, we *had* to provide our exemption certificate to suppliers before they could sell us products or services with zero-rate VAT.

HM Revenue & Customs: Charging VAT if you make supplies to charities

To the OP: Ask to see their exemption certificate (which it sounds like an IB wouldn't have) before yourco can give them VAT relief.

[sthotakura]

Thanks All

Thanks All for your responses, I spoke with the recruiter again and he now clarified that I can indeed charge the VAT.

[Wanderer]

I spoke with the recruiter again and he now clarified that I can indeed charge the VAT.

Wow, sounds like you were dealing with a real muppet.

For their next trick they will try to tell you that the rate is inclusive of VAT (no it's not, rates are always ex-vat).

[mudskipper]

Thanks All for your responses, I spoke with the recruiter again and he now clarified that I can indeed charge the VAT.

To keep it simple, if you're below the £75K threshold, don't register for VAT then you don't charge it.