Hi all,
I provide remote consulting services to businesses in European countries from the UK. I am wondering:
What should be the appropriate VAT option under QuickFiles ‘Additional VAT Options’?
Should these sales be reported on the VAT return (box 6 or elsewhere)?
Having browsed QF other threads, it seems the sales need to be reported in Box 6. So I select this as a normal invoice and select 0% VAT rate so that it shows up in Box 6 of the VAT return prepared by QF? Can somebody illuminate me on this?
Many thanks,
Solar
Provided your customers are definitely businesses rather than consumers (if they’re VAT registered in their home country then checking their VAT number should be sufficient proof of this [ref], otherwise you may need more evidence) then zero rated is probably correct, and you’d need to add a note to the invoice saying that the customer is responsible for accounting for VAT using the reverse charge - check with an accountant for the exact wording required as I believe it can be different for different countries.
If any of your customers are not businesses then the B2C rules apply and typically you’d need to charge UK VAT. Again the precise rules are complicated and depend on what you’re selling as well as who and where you are selling it to.
@ian_roberts, thank you. Indeed, the customers are businesses, and I do mention their VAT number on the invoice. As I understand the reverse charge comment was required before Brexit, but is not required anymore?
As I understand it the reverse charge thing applies to anyone selling services across borders to EU (or UK) businesses, irrespective of the seller’s location.
Certainly the rules when the customer is in the UK have never been EU-specific: any non-UK business selling services to a UK customer where the place of supply is the UK has to check whether the UK customer is a business and either state that the invoice falls under reverse charge (if the customer is a business) or register for and charge UK VAT (if the customer is a consumer - though in this situation most cases will not have the PoS as the UK).
Pre-brexit there was a distinction between EU and non-EU customers only in so far as you had to report sales to EU on an ECSL, but that’s no longer relevant (except possibly in Northern Ireland).
@ian_roberts : Thank you very much. I came across an example ‘EU VAT invoice example for services after Brexit’ here Invoicing to EU businesses and VAT considerations after Brexit and my situation is exactly like this.
I do notice your point about the reverse charge and they mention this as ‘Reverse charge for services. Customer to account for the VAT’.
My invoices have been paid by EU clients but I have not mentioned the reverse charges in post-Brexit invoices. I guess I should be doing that now assuming the example is the right way to do?
Many thanks for your help.
but they’re talking about sales of goods, not services. For goods there is a procedure for “intra-community supplies and acquisitions” that operates in a very similar way to the reverse charge - this is the procedure that used to apply to the whole of the UK but is now only used in Northern Ireland. It’s not technically called “reverse charge” but it does sometimes get informally referred to under that name.
When talking about cross-border sales the term “reverse charge” refers to sales of services, not sales of goods, and this process is the one that is unchanged by Brexit. When you receive services from an overseas supplier (irrespective of whether they’re EU or non-EU) you must reverse charge them, and when you sell services to a business customer in another country and the place of supply is that country then you do not charge UK VAT. I’m not sure whether you have to mention the words “reverse charge” specifically but you should have some sort of wording on the invoice to show that you know you had a valid reason to issue an invoice that doesn’t charge UK VAT.
Hi Solarpower, I think we’re in a similar situation. It’s funny we both posted related questions within the same week.
I am B2B and have a client in the EU who asked me to put Services subject to the Reverse Charge on my invoices to them. As far as my conversations with HMRC went, this is correct. I also recently attended a virtual Understanding VAT in the EU seminar given by the UK Export Academy/Dept. of Business & Trade (my life is truly exciting) which was helpful. They have another one coming up on 29th January, and it’s free to sign up.
On the return I put services subject to the reverse charge in the notes. There is also an inbuilt out of scope option on invoices in the Quickfile system (HMRC specifically advised me to use this option).
Thanks, Ana. I have been using the QuickFiles’ inbuilt out-of-scope option on invoices without mentioning anything about VAT, and my invoices from the European business customers have been paid. If HMRC advises to use this option, then I might adhere to this.