Box 6, Place of Supply, and Outside the Scope of VAT

[mikewasson]

I want to make sure I’m filling out my VAT Report properly, since I’ve linked QuickFile up to HMRC for Making Tax Digital and it seems like its default behaviour is in conflict with HMRC guidance. Looking at old forum posts here and elsewhere, there’s some evidence that this guidance has changed somewhat recently.

My company makes B2B sales of services to a company in the US; since it’s B2B, according to Notice 741a Section 6.3 the place of supply is in the US.

The B2B general rule for supplies of services is that the supply is made where the customer belongs.

Since the place of supply is outside the UK/EU it is considered to be “outside the scope” of VAT according to Notice 741a Section 2.1.

outside the UK or EU, that supply is made outside the UK or EU and is therefore not liable to VAT in any member state (although local taxes may apply), such supplies are said to be ‘outside the scope’ of both UK and EU VAT

As such, I’ve been marking my sales as “Outside of scope” for VAT purposes. According to Notice 700/12, Section 3.7 “Filling in Box 6”, we should include

supplies which are outside the scope of UK VAT as described in Place of supply of services (VAT Notice 741A)

However, this seems to be in contradiction to the default behaviour of ignoring outside the scope sales. What’s the best way to rectify this? Marking my sales as regular 0% rated VAT sales seems wrong. Should I just manually change the Box 6 value but keep everything else the same? Thank you in advance.

[Paul_Courtier]

Your correct that quickfire doesn’t handle it correctly.
No vat is actually 0% vat rate, or exempt, but its not out of scope. . The wording is confusing.

I’ve not had to deal with out of scope in quickfire so I’ll let someone else help you but just wanted to let you know re the above.

[Neil3]

I have the same problem. Both my accountant and HMRC have told me to fill in box 6 for my out-of-scope services sales to clients in the USA, but Quickfile doens’t seem to do that.

[Paul_Courtier]

If your accountant has suggested you do it then you could just mark the sales as no vat.

I’d take what hmrc tell you with a pinch of salt as they do not always tell you the same answer as legislation will tell you. Most accountants will also tell you this.