Reply to: Non-UK based resident

Re: Re:VAT

Interesting question. Intracommunity VAT (i.e. the case where you bill a customer in another EU country without VAT) requires the invoice to state the intracommunity VAT numbers of both the supplier and the customer. So if the customer doesn't have one, you can't do it that way (and so I quess the supplier has to charge it after all; presumably the VAT of the country of supply, which could be irritating to implement).

Re:VAT

expat - what happens if the UK customer is an individual or a non-VAT registered body such as a local government body?

Re: tax and NIC

It might be hard to convince the Revenue that you had posted yourself from France on secondment as part of an ongoing business; if they looked at your UK contract in isolation.

This is where it becomes quite complex. For NIC IR35 to apply you have to be:

1. "in reality" within the UK NIC system, and

2. as regards the "hypothetical contract" with the client, an employed earner within the UK NIC system

I think what you are saying is that it may be difficult to show secondment as regards 2 because the client (=hypothetical employer) has not seconded the worker. This may well be so. However if in reality the worker is seconded he may avoid the UK NIC system altogether at stage 1 and therefore stage 2 becomes irrelevant.

Obviously it depends very much on the circumstances of the individual case

John Antell

barrister

www.john.antell.name

Re: tax and NIC

I had forgotten about temporary postings. But isn't that quite unlikely in our business? Doesn't it require that one be posted by one's company in a country other than the one where the services are supplied? It might be hard to convince the Revenue that you had posted yourself from France on secondment as part of an ongoing business; if they looked at your UK contract in isolation.

Re: tax and NIC

. What do you really mean to ask, when you mention IR35? If you go through an umbrella company, IR35 is irrelevant. If you use your own company, then you are or are not caught depending on your relation with the client. Being non-resident has nothing to do with it, either way.

Without going into the details of the case in point (about which the questionner should seek legal advice) it is not quite true to say that IR35 all depends on the relationship with the client and that "being non-resident has nothing to do with it".
Even if the relationship with the client would otherwise cause IR35 to apply, the resident and/or "temporary posting" status of the employee can prevent IR35 applying in certain circumstances. The rules are different for tax and NIC. For tax, see, for example s56 of ITEPA 2003 for tax and EEC regulation 1408/71 for NIC.

John Antell

barrister

www.john.antell.name

Re: Re:VAT

You're struggling, Bradley.

The Babel Fish translation of what you posted says

You don't need a translation of what I quoted by way of illustration. What I myself wrote is simple:

But that's exactly the point, the services are provided in one country by a supplier based in another. Therefore it is an intracommunity billing and VAT is due from the customer and not from the supplier.

That's fine except we're talking about a foreign resident individual/corporation coming to work in the UK!

As you said yourself,

Before you say it, English VAT rules are based on European VAT rules so what Schedule 5 says holds good for the whole of the EU

The French have probably just done their usual and ignored the EC rules. In any event if it came to an argument between the French and UK regimes, the UK regime would prevail.

Cheap shots. They have done the same as everyobody else.

16.5 The VAT Act 1994 – Schedule 5

Services supplied where received.

Quite so: supplied in the UK by a French supplier (in our example). The place of supply determines which country's VAT should be paid, not who should pay it. That is determined by whether or not the supplier is based in the country whose VAT is to be paid. Simple, logical, and consistent across the EU in anybody's language. Ask the tax authorities themselves; I did, in both countries.

Re:VAT

The Babel Fish translation of what you posted says

2.2.4. Provisions of services in intellectual matter The provisions of services, such as transfers and concessions of rights of authors, patents, excise taxes, services of the advisers, engineers, offices d'études, accountancy, hiring of movable property body others that means of transport, provided by a person receiving benefits established out of France are famous to be in France when the taker is fixed with the VAT in France and y has the seat of its economic activity. On this assumption, the VAT is due by the taker.

That's fine except we're talking about a foreign resident individual/corporation coming to work in the UK!

The French have probably just done their usual and ignored the EC rules. In any event if it came to an argument between the French and UK regimes, the UK regime would prevail.

intracommunity VAT

But that's exactly the point, the services are provided in one country by a supplier based in another. Therefore it is an intracommunity billing and VAT is due from the customer and not from the supplier.

E.g. France, Code Générale des Impôts Art 259:

2.2.4. Les prestations de services à caractère intellectuel

Les prestations de services, telles que cessions et concessions de droits d'auteurs, de brevets, de droits de licences, prestations des conseillers, ingénieurs, bureaux d'études, expertise comptable, location de biens meubles corporels autres que moyens de transport, fournies par un prestataire établi hors de France sont réputées se situer en France lorsque le preneur est assujetti à la TVA en France et y a le siège de son activité économique.

Dans cette hypothèse, la TVA est due par le preneur.

Re:Schedule 5

Before you say it, English VAT rules are based on European VAT rules so what Schedule 5 says holds good for the whole of the EU

Re:VAT

16.5 The VAT Act 1994 – Schedule 5

Services supplied where received.

1. Transfers and assignments of copyright, patents, licences, trademarks and similar rights.
2. Advertising services.
3. Services of consultants, engineers, consultancy bureaux, lawyers, accountants and other similar services; data processing and provision of information (but excluding from this head any services relating to
land).
4...

VAT

Under the VAT rules IT consultants need to charge VAT where the work is physically carried out.

Rubbish! If a company in one country invoices a client in another for services, it should not collect VAT.

Re:VAT

2. If using my own LTD do I need to charge VAT (on essentially exports)

Yes. Under the VAT rules IT consultants need to charge VAT where the work is physically carried out.

If my European business posts somebody to the UK on assignment for 3 months surely they are not income-taxed in the UK, nor can a European company pay corp tax in UK either.

IANAL and IANAA but as I understand it you are quite wrong on both counts (especially the first).

If a person works in the UK then that person is liable to pay UK tax on the income earned there, if they stay in the UK less than 183 days in the tax year (and less than an average of 91 days in a 5-year period). If they stay more than that, they are taxable in the UK on all income from anywhere in the world.

This may be counterbalanced by double-taxation relief agreements between countries, but will not alter the liability in the UK for tax on income in the UK. And there is a provision for not paying tax for periods of less that 60 days (see www.inlandrevenue.gov.uk/bulletins/tb68.htm#c )

And if your European company has its centre of interests (i.e. you) in the UK, it may be assessed as being a UK company.

"If my European business posts somebody to the UK on assignment for 3 months surely they are not income-taxed in the UK"

Nope, they are liable to UK tax for the UK earned income for the three months. There is an exception for duties performed in the UK which are 'incidental' to the normal job (so you don't get taxed in the UK just for attending meetings or a training course) but a fixed term of three months is never going to pass this test. Note, that the country of physical presence has first bite so you don't get to avoid the UK tax aggro just because you home country tax bill would be higher.

No idea what the Corp tax considerations are.

tim

Thanks for the response maybe my terminology is wrong

I had a LTD company in Europe and no Tax status in UK, as I have never worked there

My previous contracts were based in Germany
I worked in EU, billed a UK agency and never paid VAT as advised it was exports

I paid income tax in my resident country but none in Germany, as I was classed really as an employee posted abroad.
I got some income tax exemptions as I was out of the country for more than a certain number of days.

If my European business posts somebody to the UK on assignment for 3 months surely they are not income-taxed in the UK, nor can a European company pay corp tax in UK either.

I understand that there is very little tax harmonisation across EU at present and that every country differs
Regards