Reply to: Are Investment Banks VAT exempt?

[mudskipper]

Thanks All for your responses, I spoke with the recruiter again and he now clarified that I can indeed charge the VAT.

To keep it simple, if you're below the £75K threshold, don't register for VAT then you don't charge it.

[Wanderer]

I spoke with the recruiter again and he now clarified that I can indeed charge the VAT.

Wow, sounds like you were dealing with a real muppet.

For their next trick they will try to tell you that the rate is inclusive of VAT (no it's not, rates are always ex-vat).

[sthotakura]

Thanks All

Thanks All for your responses, I spoke with the recruiter again and he now clarified that I can indeed charge the VAT.

[TheBakingSysAdmin]

Charity VAT exemption certificates

Many moons ago I worked for the University of Edinburgh. Since universities have charity status, we had VAT exemption. But, we *had* to provide our exemption certificate to suppliers before they could sell us products or services with zero-rate VAT.

HM Revenue & Customs: Charging VAT if you make supplies to charities

To the OP: Ask to see their exemption certificate (which it sounds like an IB wouldn't have) before yourco can give them VAT relief.

[SarahL2012]

Hi,

I am currently in a perm software developer position and got a contract offer from an investment bank and they say I cannot charge them VAT because they are VAT exempt. They also say I will have to use Limited company to provide them with services and I cannot go via Umbrella company/PAYE.

Is this the normal practice with investment banks? Please advise.

Thanks in advance.

A few years ago I worked in a Life Assurance company who were trying to tell all of their contractors that they shouldn't be charging them VAT. The company couldn't recover their VAT because most of the services they were selling were either exempt or zero rated, so contractors were effectively 20% more expensive to them than their headline day rate.

Their argument was that the services that the contractors Limited Companies were providing were exempt services, NOT the provision of staff.

I think they backed off in the end when a number of contractors contacted HMRC directly for advice.

I've done a lot of work in Financial Services over the past couple of years and never come across that argument since.

I think the relevant HMRC bit is notice 700/34, but google might help with more ideas.

[GB9]

I wonder if there is more to this as there usually is with quesitons like this.

Good point.

Never worked for an investment bank, but last time I checked, retail banks can't reclaim VAT. You still charge it to them though and they still have to pay it.

[northernladuk]

I wonder if there is more to this as there usually is with quesitons like this.

[sthotakura]

More details please. Who is client?

Thanks for your reply. Client is Morgan Stanley and the location is Glasgow.

[VectraMan]

WHS. My understanding is that you don't charge VAT to anyone outside the EU, but a client inside the EU (but not the UK) you don't actually charge the VAT as long as they're VAT registered in their local country - but you still list it on your VAT return. Reading between the lines it sounds like the latter is probably true.

[d000hg]

Regardless of the client, if any client is VAT exempt or not registered for VAT; you still must charge them VAT.

Not quite. If you are VAT regisered you have to charge VAT. If you gross over £75k you have to be VAT registered.

I would be very suspicious of a bank of any kind that doesn't understand this, or claims not to...

WHS. You only charge VAT if YOU are registered. If you client isn't registered, they have to pay it and it makes you seem 20% more expensive. If they are, they claim it back.

However depending where your client is based, you might NOT have to charge VAT. When I've had US clients, and my current Swedish client, I do not charge VAT.

More details please. Who is client?

[bless 'em all]

Thanks for your reply. The offer is direct for the Bank.

It's not the bank of Cyprus is it?

You might want to negotiate 7 day terms on your invoice, paid in anything other than Euros.

[BlasterBates]

It´s not normal but if it isn´t in the UK and you are working home then yes this may well be the case. I would go and see an accountant. If you elaborate in more depth and post in the Accounting/Legal forum some accountant might give you some clues.

[sthotakura]

.

Are you actually working for a bank or are you working for an agency that contracts your services to a bank?

Thanks for your reply. The offer is direct for the Bank.

[malvolio]

Regardless of the client, if any client is VAT exempt or not registered for VAT; you still must charge them VAT.

Not quite. If you are VAT regisered you have to charge VAT. If you gross over £75k you have to be VAT registered.

I would be very suspicious of a bank of any kind that doesn't understand this, or claims not to...

[Wanderer]

Hi,

I am currently in a perm software developer position and got a contract offer from an investment bank and they say I cannot charge them VAT because they are VAT exempt. They also say I will have to use Limited company to provide them with services and I cannot go via Umbrella company/PAYE.

That sounds really odd and completely wrong.

Are you actually working for a bank or are you working for an agency that contracts your services to a bank?