Just a generic tip for any FreeAgent users out there with this scenario, as it's an error we see quite a bit that can lead to people paying lots of VAT when they shouldn't be.
When selling B2B services to a company outside the UK and hence charging no VAT, ensure you choose the correct country from the drop down choices in the client "Contact" (it's not just for show). You'll see elsewhere in the contact there's a dropdown box which defaults to what's normally the correct option of only charging VAT when the client's in the UK.
Quite often we see people not bother with this so FreeAgent thinks the customer is in the UK. The FreeAgent user changes the VAT rate on the sale to 0%, but this doesn't achieve the same thing behind the scenes. Perhaps similar to NW's system, doing this means the sale is considered zero rated for VAT, rather than outside the scope.
If you're NOT on the flat rate scheme, making this mistake doesn't lead to too much harm, just means potential under disclosures in boxes 6 and 8 of the VAT returns, no tax impact. If you are on the flat rate scheme, massive impact, as you'll be paying over your FRS% on these sales when you shouldn't be.
-
Hi cityben,Originally posted by cityben View Post
I believe that this has now been rectified. The VAT status was listed as exempt, rather than outside the scope and hence why VAT was showing as being payable under the FRS scheme.
I hope this is clear yet PM me or contact the office if we can help further.
BrettLeave a comment:
-
If the supply us Outside of the Scope of UK VAT (and it looks as though you've established this, based on the Place of Supply rules), then the supply does not factor into your FRS turnover. This is covered in VAT 733, paragraph 6.3.Originally posted by cityben View PostLeave a comment:
-
...
You would need to ask your accountant this. It may be their portal doesn't cater for edge cases. NW do read and post on the forums so you could wait and hope they see your thread or take the better option of calling them, certainly before your next VAT period ends.Originally posted by cityben View PostLeave a comment:
-
I've now invoiced this client without VAT but my accountants portal, Nixon Williams, is showing that I still need to pay HMRC VAT for the work (so I'm actually losing 13.5%, I'm on FRS). Is that right?
I thought as I'm not charging client VAT on the work, I wouldn't need to pay VAT on it??Leave a comment:
-
You shouldn't lose out on frs. It should be outside the scope and not be included in your frs turnover. But it does depend on exactly what is being supplied.Leave a comment:
-
Hi cityben,
I have had similar questions beforehand, when providing services to the Channel Islands, if this is 'intellectual' then no UK VAT should be charged on your invoices.
However it will depend on the services that you are providing and discussed in more detail with your accountant.
If you are on the flat rate scheme, this does mean you will lose out on this specific work. However any other taxable supplies, you will still make the saving.
A point to bear in mind, is that if you do have other small taxable supplies, subject to UK VAT, you might want to consider going onto the standard rate scheme so you can reclaim VAT on your purchases, as you could instead claim some VAT back from HMRC
Leave a comment:
-
Charging VAT or not to client in Guernsey
Hi
I had a search but couldn't see a thread although I'm sure it's been asked before.
My business is UK based. I've quoted a client for some work who is based in Guernsey. I originally quoted + VAT but the client has said they don't pay VAT so can I quote them without.
Can anybody confirm this is ok?
Means I'll lose out any difference from the flat rate scheme
Thanks
Leave a comment: