First time dealing with VAT on sales to the EU and I'm unsure how to fill in the VAT return for this.
My client is registered for VAT and is using the flat rate scheme. They sold services to a business in Belgium which provided a valid VAT registration number; therefore VAT was not added to the invoice.
According to HMRC's website this income should be considered part of the flat rate turnover, so my client will have to pay VAT to HMRC even if VAT was not added to the invoice. I'm not sure if this income should also be included in box 8 of the VAT return. HMRC's website clearly says 'Dont include the value of services not related to the supply of goods.' My interpretation of this is that only sale of goods should be included and not services, but I have seen posts in other forums where accountants suggest that services should be included too. Hence the confusion as this is the first time I deal with this.
If anyone can shed a light on this I would greatly appreciate it.
Also, should the supply of services to VAT-registered businesses in the EU be included in the EC Sales List? Or is it just for supply of goods again?
Thanks.
Fabs
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I have a client who supplies services but am not on the flat rate scheme (so cannot specifically advise on how it works on that scheme). You are correct in that it doesnt go in box 8. I 'TO' tax code it as you have to show it in your purchases box and then yes it is reported on the EC Sales list as a 'code 3' ( which shows as ''services'' rather than goods) only so really just for statistical purposes.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Back to the original question!
- you are correct that supplies to EU Member States are omitted from the FRS turnover. This means you do not account for VAT on those supplies.
- you are required to submit an EC Sales List. If there total value of such sales in a year is less than £11,000, HMRC will allow you to submit an annual return; otherwise it is quarterly, and always calendar quarters, so may not coincide with the VAT returns.
The section 'Calculating your flat rate turnover' states that 'the value of supplies to other EU countries' should be included. Why do you think it should be omitted?
Can you provide a reference that I can go and read up please as this can obviously make a big difference in the VAT my client has to pay.
Thank you.
Fabs
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I found my answer in VAT notice 733, section 6.4. The supply of these services is outside the scope of VAT and should be excluded from the flat rate turnover. Good news after all!
Thanks all for your support.
Fabs
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Fixed-fee Bookkeeping Solutions for Small Businesses from £15 per month.
