Reply to: Export to Alderney

[ASB]

Tcp,

Yes. Which is why I was highlighting the place of belonging because it points out that the clients operation can affect this.

I have an issue with thd services being vatable on delivery to alderney though. Simply that is fundamentally unreasonable to expect a service provider to be able to assess how a client organises it business I order to know whether vat should be charged or not.

If it is to be then I feel it should be dealt with by the reverse charges rules.

of course this is just a view based on my concept of fairness and not what might happen in practice.

[TheCyclingProgrammer]

Check the place of belonging on that page and see if you come to the same conclusion.

Your place of supply is where the customer belongs. That is initially Alderney. But may not actually be so due to their multiple business locations.

But yes, it certainly could be your place of supply is the UK in which case vat is charged, but it is not certain. [I am inclined to think it will be, hence my earlier suggestion of outlining the entire chain to the vat help line]

My initial instinct was that the place of supply must be Alderney as that's where the company that OP would be contracted to is based, but I did a bit more digging and the HMRC VAT notice is a bit more helpful, notably this bit:

HM Revenue & Customs

If, as either the supplier or the recipient of services, you have establishments in more than one country, the supplies you make from, or receive at, each establishment have to be looked at separately. For each supply of services, you are regarded as belonging in the country where the establishment most directly connected with that particular supply is located.

And particularly:

Normally it is the establishment actually providing or receiving the supply of services which is the establishment most directly connected with the supply, even if the contractual position is different.

So if you read the above as if you were OPs client, with offices (an "establishment") in UK and a registered company in Alderney, if all the services are being performed for and at the UK establishment, then I think OP has been correctly advised that the place of supply would be the UK.

Trying to arrange contracts with an entity outside the UK to try and avoid VAT seems like such a common avoidance tactic that its not really a surprise that HMRC have got this covered.

[ASB]

Did a little more research and have refused to sign the new contract based on advice from the HMRC VAT helpline and the HMRC VAT website.

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

It's quite clear that if I am in the UK and the place of supply is in the UK (London in my case) then I charge VAT on my time.

Check the place of belonging on that page and see if you come to the same conclusion.

Your place of supply is where the customer belongs. That is initially Alderney. But may not actually be so due to their multiple business locations.

But yes, it certainly could be your place of supply is the UK in which case vat is charged, but it is not certain. [I am inclined to think it will be, hence my earlier suggestion of outlining the entire chain to the vat help line]

[redgiant]

FWIW, if there's plenty of work in the pipeline I certainly wouldn't risk losing it over jumping through a few admin hoops or losing out a bit of flat-rate scheme surplus.

Did a little more research and have refused to sign the new contract based on advice from the HMRC VAT helpline and the HMRC VAT website.

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

It's quite clear that if I am in the UK and the place of supply is in the UK (London in my case) then I charge VAT on my time.

[TheCyclingProgrammer]

I'm very tempted to go via an agent and pass on the associated costs to clientco for billing rather than direct to save on this overhead as there are plenty of other admin & finance hoops they want me to jump through besides this new one. This is the first time I have gone direct too with a clientco and it's not working out.

FWIW, if there's plenty of work in the pipeline I certainly wouldn't risk losing it over jumping through a few admin hoops or losing out a bit of flat-rate scheme surplus.

[TheCyclingProgrammer]

You're correct, no vat and noc ec sales list, see link below.
Life's going to be a joy for the Op.

VAT and the Channel Islands (Jersey, Guernsey etc)

I came across that page and it seems to suggest that most services charged to the Channel Islands would incur UK VAT - I suspect however that its out of date and pre-dates the change in place of supply rules from 2010.

[redgiant]

Thanks everyone. I'm still waiting on the final decision from the clientco on how they want to proceed - have a meeting today to discuss this with them.

I'm very tempted to go via an agent and pass on the associated costs to clientco for billing rather than direct to save on this overhead as there are plenty of other admin & finance hoops they want me to jump through besides this new one. This is the first time I have gone direct too with a clientco and it's not working out.

[darrylmg]

Normally, but possibly not in this case. You only have to report supplies of services that are subject to the reverse charge in the customers country.

If ClientCo are exempt from VAT the reverse charge might not apply so it's worth checking.

EDIT: hang on, Alderney isn't part of the EU so not subject to EU VAT. No reverse charge, no EC sales list, surely?

You're correct, no vat and noc ec sales list, see link below.
Life's going to be a joy for the Op.

http://www.brighton-accountants.com/blog/vat-jersey/

[kal]

On the FRS scheme you pay a percentage of your *flat rate turnover* which includes zero-rated and exempt supplies but not supplies outside the scope of UK VAT. It wouldn't even go on your VAT return.

Understood, my crossed wires were because I did some fixed price work for a relative a while ago and he wasn't VAT registered, he couldn't afford an extra 20% on top so I absorbed the VAT into my invoice and in effect paid myself less. He's after more work from me but I've told him its not worth my while

[stek]

You will also have the slight pain of having to file ec sales lists every month.

Quarter.

And that run Jan-Mar on etc, which might not match your accounting year period and you can't apply to stagger.......

[TheCyclingProgrammer]

This cross border VAT can be a minefield. Presonally I don't like the sound of providing services in the UK via a foreign intermediary.

I mean couldn't everyone do this and not pay VAT?

I would certainly take some advice from an accountant.

OP isn't providing services via a foreign intermediary, they are supplying services from their UK company to a client based outside the UK.

If ClientCo wants to do this that's up to them. I don't think there are any use of or enjoyment rules for professional/consultancy services so as Craig said, it's just outside the scope of UK VAT.

[TheCyclingProgrammer]

You will also have the slight pain of having to file ec sales lists every month.

Normally, but possibly not in this case. You only have to report supplies of services that are subject to the reverse charge in the customers country.

If ClientCo are exempt from VAT the reverse charge might not apply so it's worth checking.

EDIT: hang on, Alderney isn't part of the EU so not subject to EU VAT. No reverse charge, no EC sales list, surely?

[BlasterBates]

This cross border VAT can be a minefield. Presonally I don't like the sound of providing services in the UK via a foreign intermediary.

I mean couldn't everyone do this and not pay VAT?

I would certainly take some advice from an accountant.

[darrylmg]

You will also have the slight pain of having to file ec sales lists every month.

[TheCyclingProgrammer]

Would it though? On the FRS scheme you pay a %age based on your turnover (regardless of whether you charge VAT or not). If you're no longer charging that VAT to the client then you are almost 20% worse off surely

On the FRS scheme you pay a percentage of your *flat rate turnover* which includes zero-rated and exempt supplies but not supplies outside the scope of UK VAT. It wouldn't even go on your VAT return.