I think you are also supposed to also put on the invoice that it's subject to the VAT reverse charge...
Edit: as just noticed the bit in the OP... yes, you are supposed to state that the customer may have to apply the reverse charge. I don't think there's a legally prescribed exact wording for it.
-- Edited by Figurate on Thursday 29th of November 2012 04:15:02 PM
I do the bookkeeping for a UK company that sells training, and who is on the Flat Rate Scheme. He is going to supply training in Germany for a German company that I think is VAT registered.
Am I correct in thinking it is outside the scope of VAT but the sales invoice should state that the customer may have to apply reverse charge?
Where would it appear on the VAT return, if at all?
I think he has to produce an EC sales list?
The VAT information on HMRC is a minefield and the telephone Helpdesk just said I had to read it and interpret it correctly - not much of a helpdesk. I only want to get it right!
The sales invoice must show the German company's VAT number on it; this is the evidence of a B2B transaction, which means your client need not charge VAT. Notice 700/12 is quite helpful, as it shows what entries need to go into the different boxes on the VAT Return. This shows that the value of such sales should be included in Box 6 only. You also need to do an EC Sales List; Notice 725, chapter 17 explains this.
Can I just add to the above excellent answer that by not charging VAT the VAT would be zero rated for these transactions, not exempt.
I read the reply that such was what was meant and hope that you don't mind me chipping in that the reply could have been slightly misread on that one point.
kindest regards,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Yes, I agree. If it's a B2B supply of services and the place of supply is Germany, that's outside the scope of UK VAT, but subject to the reverse charge etc... (Some software fudge the issue by just referring to zero-rated EC supplies or similar...)
If a UK business supplies services to a business customer located in an EU member state but outside the UK the supply is subject to the rules of that member state and is outside the scope of UK VAT.
If a UK business supplies services to a non business customer located overseas the supply is subject to normal UK rules as if the customer had been in the UK.
For B2B supplies there is a further paragraph that is apt to this scenario :
Supplies are taxed where the customer is established. It is the responsibility of the Customer, not the supplier to account for any output tax relating to such supplies (known as reverse charge procedures).
So, sounds as though you are right again Bill. (no surprise there then, lol)
all the best,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Just to add to the confusion, it might be important to note that not all B2B supplies of services are deemed to take place where the customer belongs. (eg for land and property services, it's where the land/property is, or if it's an event, it's where the event takes place... there's quite a few exceptions).
methinks we're all wasting too much time talking about how we come up with what we charge that we should be spending with our heads buried in tax manuals... And on that note...
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
