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.