My question is about whether or not to charge VAT on an invoice to an agent.
We are a UK based VAT registered partnership. We perform a street entertainment act.
Recently we performed in Dubai for a Dubai based client.
This work was arranged through a UK based VAT registered entertainment agency.
The contract was made out to be between ourselves, the act & the Dubai client.
But our invoice for the fee for the work was made out to the UK agents name & address.
No invoices or payments went direct between the client and the act. All invoices & payments were to/from the agency, and made out in their name.
My question is:
How do we (the act) treat VAT on our invoice to the agency? Is it:
20% VAT
zero-rated
exempt
outside of the scope of UK VAT
The difference between 2,3 & 4 is potentially important as we account for VAT under the Flate Rate Scheme, and there is a difference in how those three options are handled.
As the partnership's de-facto bookeeper I have been trying to educate myself with HMRC Notice 700 about the VAT rules for agents, sections 22-25, but I can't sort out the differences between an agent acting in their name or their principle's etc. Because the agency issues/receives invoices in their own name, does that mean they are acting in their own name? Does the fact that the contract is between the act & the client have any relevance?
If we had arranged this work direct with the Dubai client then under 741A/8.1.1 Place of Supply of Service 'where performed' rules this work would have been outside of the scope of UK VAT. It is the interplay with the UK VAT registered agent that I haven't been able to sort out.
We work a lot with this agency, and when they get us work within the EU (ie in Belgium or Netherlands) we charge the agency 20% VAT on our invoices to them. But for this Dubai work the agency thinks that we don't charge them for VAT at 20% - they haven't said whether it is 0-rated,exempt & outside of the scope.
That is my first take on it as well. The agent though has been practicing for years and does a lot of work abroad so I wonder why they think different.
Do you understand notice 700 section 22-24 about agents? it is pretty impenetrable to me.
I cant speak for the agent and whether they are doing it right or not (despite the fact they have been in business for years). Also, I do not know which specific question you put to them and whether or not they were answering the question you asked or indeed the question they thought you asked. It may well be that they are just considering their position and not yours properly.
I could ask the question as to why do you add VAT to your invoices on the EU jobs?
As far as I understand (although I stand to be corrected) - you supply is with the agents, a UK company, therefore you add VAT.
Maybe someone else on here can add/comment further. If not - might be worth a call to HMRC for a ruling.
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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
I did have a little read at this one, and the guidance. I fear it is too complex to provide a proper answer on the forum. Do PM me, and we can see what we can sort out!
