Reverse charge VAT and expenses.

[Craig@Clarity]

Both. EU customers still have to account for the reverse charge on services bought outside their country either way. I’m not sure there’s any obligation on a UK business to mention that on their invoice though anymore.

Customer will have to account for the reverse charge. The UK supplier will treat the sale as outside the scope with no obligations to mention anything about reverse charge on their invoice.

[TheCyclingProgrammer]

Yes. Either reverse charge or outside the scope due to Brexit

Both. EU customers still have to account for the reverse charge on services bought outside their country either way. I’m not sure there’s any obligation on a UK business to mention that on their invoice though anymore.

[Whitelime]

Yes. Either reverse charge or outside the scope due to Brexit

Much appreciated.... thanks a lot.

[Craig@Clarity]

Many thanks for all of your responses, and apologies for the delay in replying.



Thanks for the detailed response Craig. So just to clarify with a working example.....

My Ltd;
- Pays £200 + £0 VAT for the Eurostar
- Pays £500 + £100 EU VAT for the Hotel (also 20% VAT rate in the EU country)
- There's £0 UK VAT to be reclaimed

If the client has agreed to cover 100% of the cost;
- Invoice would be for £800 + £0 VAT (because of reverse charge)

Have I understood correctly?

Many thanks, WL.

Yes. Either reverse charge or outside the scope due to Brexit

[Whitelime]

You need an Accountant

I appreciate the advice, but for several reasons I respectfully disagree;

1. I was with NW and literally ran away at year-end just before the data breach. I'm 99% sure my accountant wouldn't have been able to answer this question correctly.

2. It's cheaper for me to swallow the expense than pay an accountant for a year.

3. I've been contracting for nearly 10 years and this is the 1% of knowledge I'm lacking (and if the example given to Craig is correct, it's actually how I understood the situation before asking).

4. A few hours of googling would confirm my understanding 100%, but I thought it was reasonable to ask on a contractor forum.

5. I believe this MSC bulltulip will be used to punish anyone outside and paying monthly for an accounting service. At best I'd pay for a year-end double-check (still possible) which wouldn't answer this sort of question mid-year.

Cheers, WL.

[eek]

Many thanks for all of your responses, and apologies for the delay in replying.



Thanks for the detailed response Craig. So just to clarify with a working example.....

My Ltd;
- Pays £200 + £0 VAT for the Eurostar
- Pays £500 + £100 EU VAT for the Hotel (also 20% VAT rate in the EU country)
- There's £0 UK VAT to be reclaimed

If the client has agreed to cover 100% of the cost;
- Invoice would be for £800 + £0 VAT (because of reverse charge)

Have I understood correctly?

Many thanks, WL.

You need an Accountant

[Whitelime]

Many thanks for all of your responses, and apologies for the delay in replying.

Hi. Simply put, there's no VAT on travel and no UK VAT on accommodation in the EU so your UK company won't be able to reclaim any of it under expenses. If you're recharging the "expenses back to the client" as part of your billing then you add it into your sales invoices. There'll be no VAT to add on your sales invoice either. If you're asking what amount you need to stick on your sales invoice...well that comes down to you, what you want to recharge and/or what has been agreed with the client.

If you spend £100 on travel and accommodation but you're able to recharge £150 back to the client then that what you charge. If you spend £100 but can only recharge what you spend (£100) then that's what you put on your sales invoice. Equally, if you spend £100 but can only recharge 50% the £50 is what you put on your sales invoice.

"Expenses recharged" doesn't necessarily mean the same amount your UK company incurs. "Expenses recharged" is simply a figure that you decide to add onto your sales invoice or what you've agreed can be billed.

Thanks for the detailed response Craig. So just to clarify with a working example.....

My Ltd;
- Pays £200 + £0 VAT for the Eurostar
- Pays £500 + £100 EU VAT for the Hotel (also 20% VAT rate in the EU country)
- There's £0 UK VAT to be reclaimed

If the client has agreed to cover 100% of the cost;
- Invoice would be for £800 + £0 VAT (because of reverse charge)

Have I understood correctly?

Many thanks, WL.

[Craig@Clarity]

Where I'm unsure is how I should treat the VAT for the travel and accommodation in this situation. Any advice is much appreciated.

Cheers, WL.

Hi. Simply put, there's no VAT on travel and no UK VAT on accommodation in the EU so your UK company won't be able to reclaim any of it under expenses. If you're recharging the "expenses back to the client" as part of your billing then you add it into your sales invoices. There'll be no VAT to add on your sales invoice either. If you're asking what amount you need to stick on your sales invoice...well that comes down to you, what you want to recharge and/or what has been agreed with the client.

If you spend £100 on travel and accommodation but you're able to recharge £150 back to the client then that what you charge. If you spend £100 but can only recharge what you spend (£100) then that's what you put on your sales invoice. Equally, if you spend £100 but can only recharge 50% the £50 is what you put on your sales invoice.

"Expenses recharged" doesn't necessarily mean the same amount your UK company incurs. "Expenses recharged" is simply a figure that you decide to add onto your sales invoice or what you've agreed can be billed.

[TheCyclingProgrammer]

VAT can be complicated but regardless of what the expenses are that you are incurring, what you subsequently recharge the customer to cover those expenses is still just part of your overall service fee so the VAT treatment would be the same as what you would bill them for your time, not whatever the VAT treatment is for the service you purchased (which is why you still add standard rate VAT when re-charging expenses that were zero-rated when you paid for them).

On that basis, I would say from a UK VAT POV, it remains outside the scope of UK VAT and the customer accounts for it under the reverse charge just like your day rate. Whether or not you may incur a local VAT liability in the EU for services performed while there is another question and not one I can answer but probably not worth worrying about for a short visit.

[northernladuk]

I think having no accountant is a rather extreme reaction to the MSC stories.
Get an accountant, just not one who runs your business for you.
If very nervous about the MSC stories, get a local accountant.

Totally this. Not having one is just throwing the baby out with the bathwater. You are going to jump from one problem staight in to another.

[Lance]

I think having no accountant is a rather extreme reaction to the MSC stories.
Get an accountant, just not one who runs your business for you.
If very nervous about the MSC stories, get a local accountant.

[eek]

Hi All,

Looking for some advice with regard to (reverse charge?) VAT for expenses. After the MSC story, I'm currently DIYing everything using Freeagent, so there's not an accountant to ask.

Normally I work 100% remotely for an EU company from the UK, and everything is invoiced with no VAT as reverse charge services/supplies. The company has asked me to visit the HQ (in the EU) for 1 week just to meet the team, etc. I will need to book the travel/accommodation myself and then invoice the EU company.

Where I'm unsure is how I should treat the VAT for the travel and accommodation in this situation. Any advice is much appreciated.

Cheers, WL.

You invoice the whole lot including VAT as that is what you need to recover..

If they don't want to pay the VAT the solution is for them to pay your hotel bill with the hotel (we had clients in the past who would do that unless we could do it cheaper than they could).

[Whitelime]

Hi All,

Looking for some advice with regard to (reverse charge?) VAT for expenses. After the MSC story, I'm currently DIYing everything using Freeagent, so there's not an accountant to ask.

Normally I work 100% remotely for an EU company from the UK, and everything is invoiced with no VAT as reverse charge services/supplies. The company has asked me to visit the HQ (in the EU) for 1 week just to meet the team, etc. I will need to book the travel/accommodation myself and then invoice the EU company.

Where I'm unsure is how I should treat the VAT for the travel and accommodation in this situation. Any advice is much appreciated.

Cheers, WL.