Just a query on Mobile franchise business. I have started keeping books for a T mobile franchisee and have noticed I might need to do reverse charges for certain invoices above £5k. On the invoice, it states ''If you are based in the EU but outside the UK this supply may be subject to reverse charges'' but then it has indicated the tax code as RC and worked out the net invoices and 20% vat at the bottom of the invoice and states ''Denotes reverse charge supplies. Customer to pay 20% VAT to HMRC''. So i am correct in assuming I need to add 20% to Box 1 and Box 4 and declare this as Reverse charges? Also other query is, what if the business hasn't declared this for 7 months from the start, sure its an under declaration of box 1 and box 4, but it doesn't affect the net vat either ways. Can I simply add the figures for 7 months on the next vat returns to box 1 and box 4? What are the penalties involved?
Hi John Last time you were on here you were asking advice about your wife and we didn't hear back anything after several people posted.
Clearly things have moved on for you and so its perhaps appropriate for the intro that we usually ask newbies to do. So how about a an short intro, background/how long a bookkeeper/do you have your own bookkeeping business or work for an Accountant or a company/how far you are with your studies/what qualification you are studying/what prof body you are with?
Also, when you say doing the books....where up to? Tb? If that, do they have an Accountant?
what is the £5k reference?
Would need to know more about the transaction, so a copy of the invoice would help.
Do they have your clients VAT number and are they quoting it on invoices to you?
Where are they based for VAT purposes?
Not enough info to comment on any possible penalties.
-- Edited by Cheshire on Friday 4th of November 2016 11:32:58 PM
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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
Apologies for the delay, I am originally from Canada, Accountant by profession, residing here now since 2015 after marriage to a Brit. I hope this makes sense to you now why i queried regarding my wife, as I wasn't sure how things worked here!
I have attached a copy invoice here, What confuses me more is I have read HMRC guidelines as below, referring to point 5.1
Based on above, the Supplier is in Hatfield, UK, so as the customer is in the UK, place of supply is the UK, Supply is not exempt, though, £5k invoices don't carry vat. Now answers to your questions as below
what is the £5k reference? - Invoices above £5k in mobile industry dont carry vat generally.
Would need to know more about the transaction, so a copy of the invoice would help. -attached herewith
Do they have your clients VAT number and are they quoting it on invoices to you? Yes, UK Vat registered
Where are they based for VAT purposes? Hatfield, UK
What confuses me more is the final line at the end of the invoice, ''If you are based in the EU but outside the UK this supply may be subject to reverse charges.''
Any thoughts would be massively appreciated,
Thanks and regards
-- Edited by Newbie84 on Tuesday 8th of November 2016 07:06:29 PM
Hi John
Thank you for the background info - certainly helps us when pitching answers.
I must apologise as Ive had this niggling feeling in the back of my head when I read 'mobiles' but couldnt put my finger on why. Then it came flooding back to me late last night.
The VAT rules were changed a little while back in the telecoms and broadcasting sectors. I recall thinking it impacted on one of my clients due to the broadcasting angle, but after doing some initial digging and going to a presentation by our esteemed VAT expert, Les Howard, I realised it didnt affect my client so just parked the information at the back of my brain, never to be used since.
Anyway - Ive enclosed a couple of links that might help you on the right path, although shamefully I havent had the chance to review them all, just far too busy for that, so I do hope they answer all of your points.
Im still not sure about the £5k - I dont understand why that would be, but of course you may well find the answer in here, or indeed when you get into the HMRC manuals under the 'telecommunications' section. Maybe post us an update, with any supporting links, when youve waded through the treacle that is the HMRC site and EU VAT legislation.
Interestingly that invoice does not quote your clients VAT number, which they should do - well thats my understanding of Reverse charge VAT processes. Also - the Head Office VAT number did not pop up on the VEIS website VAT number checker (ec.europa.eu/taxation_customs/vies/vieshome.do) - very intruiging and a wee bit worrying - I would be checking that out as it might be a misprint.
The Reverse Charge rules are actually different than those for 'ordinary' goods or services. Mobile telephones have been part of widespread fraud, so they have their own Reverse Charge scheme, and hence the £5k limit. You need to look at VAT Notice 735. You will also need good professional help to make sure you don't fall foul of the due diligence rules, etc. You might speak with Vince Curley about this: www.vincentcurley.com/
