Reply to: Relocating back to the UK, starting up as sole trader

[jamesbrown]

Like you said, services are not exports and for most of us providing consultancy and software development we are providing services.

You should certainly be checking this as place of supply rules can be complicated but bespoke software development and consultancy almost certainly is a service.

Even if you're selling pre built software, in the age of digital distribution it's still considered an electronically supplied service rather than a good.

An accountant should be able to help with this.

Yes, I agree with all of this. I can't imagine too many scenarios where software would be considered goods (one example would be exporting software on media).

For example:

"4.5 Exports of computer software
Exports of standard ('normalised') computer software packages are regarded as
supplies of goods, which may be zero-rated on export from the EC, subject to the
conditions in this notice.
Supplies of:
• specific items of software tailored to the individual requirements
of a company, and
• software transmitted by phone or other data network
are generally regarded as supplies of services and are therefore outside the scope of
this notice. You can find further information in Notice 741A Place of supply of
services."

[TheCyclingProgrammer]

Check that with your accountant and your next vat inspector.

Exports outside the eu are included in frs turnover unless it's services being provided. Then you just have the argument as to what is a service where they questioned if a website with a monthly subscription was a service.

I just gave up and shunted the business to another company to ensure I didn't need to worry about it. And if uk sales hit the threshold I will just use standard tax accounting

Like you said, services are not exports and for most of us providing consultancy and software development we are providing services.

You should certainly be checking this as place of supply rules can be complicated but bespoke software development and consultancy almost certainly is a service.

Even if you're selling pre built software, in the age of digital distribution it's still considered an electronically supplied service rather than a good.

An accountant should be able to help with this.

[jamesbrown]

But that is different from how it used to be and I can't find the date of the change..
VAT between the UK and the USA is just the first example I found with the explicit statement

No changes that I'm aware of. I think this alludes to a difference between the supply of goods versus services. Supplies of goods may be zero-rated. Supplies of services to the USA are outside of the scope of UK VAT unless the special rules on place of supply are applicable (which apply to some types of services/supplies). It's one of those areas where a little knowledge can be dangerous, so I'd agree with the general advice on checking with a professional.

[stek]

Nothernladuk: I am an independent contractor: I work for myself not through any agents.

Eek: I provide *services* to overseas clients not goods.

Scooterscot: hmmmnnn, I currently pay 42% income tax on all income I earn over about 500 quid (per year!), plus the highly complex tax system is in a language I only understand 75% of so I doubt there can be more obstacles than I already face.

I like this guy! Will you be my friend? I'm serious, I have no friends but...

[eek]

The rules are quite clear on this. For example:

HM Revenue & Customs: Flat Rate Scheme for VAT

"Your flat rate turnover is all the supplies your business makes..." "Don't include:...any supplies outside the scope of UK VAT"

If a supply is outside of the scope of UK VAT, it is not included in the FRS turnover.

But that is different from how it used to be and I can't find the date of the change..
VAT between the UK and the USA is just the first example I found with the explicit statement

If the UK business accounts for VAT on the Flat Rate Scheme, it must include the value of the export in the turnover on which the Flat Rate VAT is paid. This may mean that the business is better off not being on the Flat Rate Scheme.

[speling bee]

Coming from the EU to the UK for business has 'go away' written all over it. So many obstacles.

What's it like coming from the EU to Germany for business?

[jamesbrown]

Eek, that is sort of wrong. But it is the pragmatic view.

Assuming a typical contracting role the supplies are outside the scope. Not zero rated. This does indeed take the out of the frs scheme. Hmrc guidance is quite clear on this.

I entered into a lot of correspondence in order to try and get this confirmed. I failed.

I took the view to keep away from frs. It seemed likely that I might have to end up arguing my case in a tribunal. Current guidance is clearer, so it may be easier.

That surprises me, to be honest. In the past, I've found the VAT helpline to be (surprisingly!) quite helpful. FWIW, I've also had this confirmed by my accountant when I considered joining the FRS as I do export a lot but, in the end, I preferred to retain the ability to reclaim VAT on purchases.

[jamesbrown]

Check that with your accountant and your next vat inspector.

Exports outside the eu are included in frs turnover unless it's services being provided. Then you just have the argument as to what is a service where they questioned if a website with a monthly subscription was a service.

I just gave up and shunted the business to another company to ensure I didn't need to worry about it. And if uk sales hit the threshold I will just use standard tax accounting

The rules are quite clear on this. For example:

HM Revenue & Customs: Flat Rate Scheme for VAT

"Your flat rate turnover is all the supplies your business makes..." "Don't include:...any supplies outside the scope of UK VAT"

If a supply is outside of the scope of UK VAT, it is not included in the FRS turnover.

[ASB]

Nothernladuk: I am an independent contractor: I work for myself not through any agents.

Eek: I provide *services* to overseas clients not goods.

Scooterscot: hmmmnnn, I currently pay 42% income tax on all income I earn over about 500 quid (per year!), plus the highly complex tax system is in a language I only understand 75% of so I doubt there can be more obstacles than I already face.

Next question: am I going to face issues with not having paid any UK tax for the last ±15 years? I have of course been paying tax the EU country I was resident in for all those years.

it is worth checking the place of supply rules for exactly what you are providing. They are very likely outside the scope, but you need to get clarity because you will suffer the frs vat percentage if you join that scheme and you have miscategorized.

[eek]

Nothernladuk: I am an independent contractor: I work for myself not through any agents.

Eek: I provide *services* to overseas clients not goods.

Scooterscot: hmmmnnn, I currently pay 42% income tax on all income I earn over about 500 quid (per year!), plus the highly complex tax system is in a language I only understand 75% of so I doubt there can be more obstacles than I already face.

Next question: am I going to face issues with not having paid any UK tax for the last ±15 years? I have of course been paying tax the EU country I was resident in for all those years.

But as I said before its not for you to decide if you provide services, it ends up being HMRC who decide whether its a service or not. As both ASB and myself state its just not worth the risk of FRS if you export a lot..

[Lemondrop]

Nothernladuk: I am an independent contractor: I work for myself not through any agents.

Eek: I provide *services* to overseas clients not goods.

Scooterscot: hmmmnnn, I currently pay 42% income tax on all income I earn over about 500 quid (per year!), plus the highly complex tax system is in a language I only understand 75% of so I doubt there can be more obstacles than I already face.

Next question: am I going to face issues with not having paid any UK tax for the last ±15 years? I have of course been paying tax the EU country I was resident in for all those years.

[ASB]

Check that with your accountant and your next vat inspector.

Exports outside the eu are included in frs turnover unless it's services being provided. Then you just have the argument as to what is a service where they questioned if a website with a monthly subscription was a service.

I just gave up and shunted the business to another company to ensure I didn't need to worry about it. And if uk sales hit the threshold I will just use standard tax accounting

Eek, that is sort of wrong. But it is the pragmatic view.

Assuming a typical contracting role the supplies are outside the scope. Not zero rated. This does indeed take the out of the frs scheme. Hmrc guidance is quite clear on this.

I entered into a lot of correspondence in order to try and get this confirmed. I failed.

I took the view to keep away from frs. It seemed likely that I might have to end up arguing my case in a tribunal. Current guidance is clearer, so it may be easier.

[scooterscot]

Coming from the EU to the UK for business has 'go away' written all over it. So many obstacles.

[eek]

Supplies that are outside of the scope of VAT are exactly that, they are not within the scope of turnover for the FRS.

Check that with your accountant and your next vat inspector.

Exports outside the eu are included in frs turnover unless it's services being provided. Then you just have the argument as to what is a service where they questioned if a website with a monthly subscription was a service.

I just gave up and shunted the business to another company to ensure I didn't need to worry about it. And if uk sales hit the threshold I will just use standard tax accounting

[jamesbrown]

How do you find your work? UK agents won't touch a sole trader.

Definitely an issue if the OP relies on agents, but working "from home in a specialised industry", suggests that they may not rely on agents, rather contacts and reputation...