The article linked mention sell of service which if it was sold to UK customer VAT would not be out of scope.
The article mention that since UK is not part of EU, even service are out of scope of VAT.
and that is what I want clarification on from people with experience.
Is the article right or wrong?
@wighawag if you’re excluding VAT from your invoices to EU based customers under the place of supply rules, the net amount should still be reported in box 6 of your VAT return. Applying the zero VAT rate in QuickFile will ensure that the net value is reported.
The exception to this would be if you were on the Flat Rate VAT scheme. In this instance the supply should not form part of your flat rate turnover and those qualifying invoices can be marked as out of scope.
The guide you refer to was published in 2015 and seems to suggest completely excluding all B2B service based supplies to non UK customers from your VAT return. This may have been true in 2015, although it is my understanding that these NET amounts do need to be reported in box 6 for standard VAT accounting rules.
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Overseas sales of services are technically out of scope of UK VAT, however the VAT guidance specifically mentions the following as being included in box 6:
Ticking the out of scope box excludes the invoice from box 6, so in this case it’s better not to tick it and treat these sales as if they were zero rated.
Sales of goods to the Channel Islands are a zero rated export, should the invoices be marked “out of scope of UK VAT”?
Exports of goods are zero rated, not out of scope, so no, you don’t need to tick that box.
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Hi,
I have been reading this and other posts on the forum and I think (and can be totally wrong) that quickfile is missing one option for handling VAT overseas sales.
I will try to explain it with an example.
Selling Digital services, from the UK to a customer in EU (lets say Spain to have a number to play 21%)
We create the client as ES, then we need to add 21% VAT to the invoice, but we need to make sure that VAT is ZERO for UK VAT, but also that the whole amount appears on box 6 on the UK VAT Return.
- If we mark the client as out of scope VAT, we can setup 21%, but it won´t appear on box 6.
- If we mark the client as VAT standard and setup VAT 0%, it will appear on box 6, but we cannot use the 21% correct Spanish VAT on the invoice.
How can we do this with Quickfile?
Thanks
Hi @expertoswp
I’ve replied to your private message, but just to clarify - VAT is a complex area of the tax system, even more so when it involves sales and purchases from outside of the UK.
We’re not able to advise on what values need to be entered into each box. However, it’s highly recommended that you speak with your accountant to ensure this is handled correctly.