Does anyone know anything about tax implications of supplying website design and support services from the UK to Australia? I'm aware of VATMOSS but that's only for the EU. TIA.
Alys
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Alys
Alys Stuart, Stuart Nicholls Accountancy Services, Preston, Lancashire.
The VAT rules are:
- for B2B services, the Place of Supply is where the customer is located. So you will need evidence that the customer is in business. If this does apply, you will need to check the Australian VAT system, to ensure you are not triggering a liability to register there; or
- for B2C services, the Place of Supply is where the supplier is located. In this case, UK VAT will apply.
(Don't let MOSS confuse you, as that is a specific exception to rules for digital services.)
Hi Alys
Is your client a Limited company? You might also need to consider getting a certificate of residence for the Limited, which you get via The Corporation Tax department of HMRC - you do have to apply online these days. Bloomin beggars are sitting on one of mine they have had for weeks!!!
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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
The company is a sole trader based very much in the UK and will be a B2B supply - he was offered a full time job by the Australian company but doesn't want to move out there so they've agreed to him working remotely.
I've never come across a certificate of residence before, that's something else learned today!
Time to trawl some Oz websites!
Alys
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Alys
Alys Stuart, Stuart Nicholls Accountancy Services, Preston, Lancashire.
PS Alys.. did you get my reply on Twitter regards your question about reducing share capital? Not heard back from you, and wondered if it had gone astray in cyberspace?
Isn't the customer in Oz? The service is being sold from the UK, and so B2B supply to Oz is outside the scope of VAT? Website design isn't an electronic service, because it has a human element to it?
Isn't the customer in Oz? The service is being sold from the UK, and so B2B supply to Oz is outside the scope of VAT? Website design isn't an electronic service, because it has a human element to it?
Yes, yes and I agree.....thats my understanding.
-- Edited by Cheshire on Tuesday 10th of November 2015 08:25:02 AM
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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
As far as I understand the client is a UK based trader, this is why the basic place of the supply is UK.
In my opinion, website design is the same as website supply, I.e. electronically supplied service, and therefore under para 9 sch 4A VATA 1994 the place of supply is where it is "used and enjoyed", Australia.
If the website design does not fall within electronically supplied services(I am not 100% sure that it is) then it is a UK supply and UK VAT must be charged.
Nice to have someone else on here who doesn't allow being outnumbered to deter their stance (been in that position many times myself).
However, I'm afraid to say that I'm batting with the opposition on this one though. Web design is a service much the same as any other IT consultant. It is not the electronic supply of the website to the consumer but rather the design of it for a business so I do not see this as an electronically supplied service.
The UK worker is providing an intellectual service, I assume they are working through there own limited company providing a business to business service. As such the place of supply is where the customer belongs, namely Australia.
Considering the above the supply of the "service" (need to emphasise that word) for the Australian business would be outside the scope of UK VAT.
VAT would not be charged assuming that we are reading the scenario correctly (and Alys has been informed correctly which I am not sure she has).
The question that needs to be asked and may open up the answer to this one is how is the UK business paid? Does the designer report to Australia or does the Australian company have presence in the UK? If reporting to Australia, why did they choose to use a UK based designer when they have no shortage of their own? Something about this scenario doesn't feel as though any of us have the whole story and Alys is the only one in a position to get the real full facts and take a look at the wording of the contract.
I'm sure that those clever people on Aweb must have encountered this scenario before. Lets have a look what we can find over there....
Time passes...
More time passes... (lots of hits but not getting anything matching the scenario that I'm looking for).
Ahhh, here we go... this one seems to fit our needs.
Think that pretty much concurs with the general concenus on this in that the service is outside the scope of VAT.
Alys, think that we need more info here.
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.
Hello Shaun - you beat me to it and put your case better than I would. Plus I was pondering how Julie's response was quite adrift from Les'. But i was just going to clarify that website supply (would be MOSS if it was EU as it is electronically supplied) and website design/development (wouldnt be MOSS given human angle) are very different. Plus added to that the place of supply is where the customer is based ie Aus in this particular case. I have encountered this is relation to supplies of services for a client in various parts of the world, within EU and outwith.
Agree that we need more from Alys, one question I asked yesterday. Think she hasnt been around for a few days.
-- Edited by Cheshire on Tuesday 10th of November 2015 06:48:27 PM
__________________
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
Don't worry about it Julie, we all misread questions occassionally... Can I take it that we are all singing from the same hyme sheet now and just waiting for more info from Alys?
On the bright side I think that your misreading the question has reinforced the knowledge of all of the contributors to this thread.
kindest regards,
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.
Have I have been given some wrong information from someone who my client employed, to go through the VAT issues with him (wont mention names, but it wasn't Les!) to be prepared for MOSS?!
The report he provided the client with, back in August 2014, states:
Your supplies can be broken down into four headings and for each heading the VAT liability can be determined as follows;
1. Supply of services to customers in the UK (business and non-business).
Regardless of the status of your customer, be they in business or private individuals your supply to them of a service will be subject the standard rate of UK VAT which is currently 20%.
2. Supply of services to a business customer in the EU.
Unlike the UK, which has a registration threshold which allows some businesses to remain unregistered for VAT, most EU Member States require a VAT registration for a business making any taxable supplies regardless of value. So to determine whether a customer is in business, you should normally require his VAT registration number. Once you have that you can, under the reverse charge provisions, transfer the place of supply to where the customer is registered for VAT. The customer then accounts for the VAT under the reverse charge mechanism, whereby they declare output VAT and recover an identical amount as input VAT (if they are fully taxable) so there is no net VAT cost.
3. Supply of services to a non-business customer in the EU.
Until 2015 the place of supply for services provided to non-business customers will be the UK and charges will be subject to 20% UK VAT.
4. Supply of services to business or non-business customer outside of EU
Regardless of whether the customer is in business or not, the supply of services to anyone established outside the EU is outside the scope of both UK and EU VAT. However, you will need proof that the customer is established outside the EU.
-- Edited by FoxAccountancyServices on Sunday 15th of November 2015 02:18:38 PM
PS.. this client sells electronic subscriptions which allow users all over the world to access information as PDF. Thats why he falls into MOSS when EU B2C
Just when I think I get it... I am thrown off the bull again!!
Hmm.. I think this might be due to the fact that he is selling electronic services (no human element) and so place of supply is automatically where the customer belongs... Be great if Les can confirm that - just had a mini panic attack!!
Have I have been given some wrong information from someone who my client employed, to go through the VAT issues with him (wont mention names, but it wasn't Les!) to be prepared for MOSS?!
The report he provided the client with, back in August 2014, states:
Your supplies can be broken down into four headings and for each heading the VAT liability can be determined as follows;
1. Supply of services to customers in the UK (business and non-business).
Regardless of the status of your customer, be they in business or private individuals your supply to them of a service will be subject the standard rate of UK VAT which is currently 20%.
2. Supply of services to a business customer in the EU.
Unlike the UK, which has a registration threshold which allows some businesses to remain unregistered for VAT, most EU Member States require a VAT registration for a business making any taxable supplies regardless of value. So to determine whether a customer is in business, you should normally require his VAT registration number. Once you have that you can, under the reverse charge provisions, transfer the place of supply to where the customer is registered for VAT. The customer then accounts for the VAT under the reverse charge mechanism, whereby they declare output VAT and recover an identical amount as input VAT (if they are fully taxable) so there is no net VAT cost.
3. Supply of services to a non-business customer in the EU.
Until 2015 the place of supply for services provided to non-business customers will be the UK and charges will be subject to 20% UK VAT.
4. Supply of services to business or non-business customer outside of EU
Regardless of whether the customer is in business or not, the supply of services to anyone established outside the EU is outside the scope of both UK and EU VAT. However, you will need proof that the customer is established outside the EU.
-- Edited by FoxAccountancyServices on Sunday 15th of November 2015 02:18:38 PM
If I may comment on your advice.
I agree with most of what you said, but I would just add to your 2. that such services are outside the scope of UK VAT.
In your 3. I assume you meant that from 1 January 2015 a UK supplier of electronically supplied services will need to charge VAT at the local rate and has two options: account for the VAT under MOSS or the UK supplier will have to register for VAT in every each member state where its customers are located and then report VAT under the rules of that member state.
With regards to your 4. I would amend it as follows: the place of supply of electronically supplied services to a non taxable person, who belongs outside the EU, is where that person belongs and such supply is outside the scope of UK VAT.
However, the place of supply of electronically supplied service to a business, I.e. taxable person, which belongs outside the EU,
is either outside the EU or UK depending where the services are used and enjoyed.
If the services are used outside the EU then such supply is outside the scope of UK VAT.
If however the services enjoyed in the UK to any extent then the supply should be treated as supplied in UK.
-- Edited by JulieS on Saturday 21st of November 2015 12:40:53 PM
