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Re:Should you charge VAT?

05/02/2019 16:16:09
Hi,

Thanks for your question.

VAT MOSS is only relevant to Business to Consumer supplies of digital services. If the services are supplied business to business (B2B), then your supplies would be outside the scope of UK VAT, when supplied outside the UK.

Only your supplies in the UK would count toward the UK VAT threshold of £85,000, so you do not have to register for UK VAT unless you hit this threshold, but may wish to voluntary register. EC Sales Lists will be relevant only if you are UK VAT registered and making these types of B2B supplies.

As VAT is a self-assessing tax, please refer to the following links and follow this guidance.

Place of supply services (VAT notice 741A)

VAT notice 700/1: who should register for VAT?

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Should you charge VAT?

12/02/2019 10:06:59
We have a small property company and are thinking about employing a handyman to do small jobs for our customers. When we charge our customers we were thinking of applying VAT to the products he is using as we would be re-selling these. However when we want to charge for his time such as on an hourly rate, should we be charging our customers £30 per hour + VAT for example?

Lastly when we are subcontracting for a big repair job, the winning company has been wanting to return 10% of the contract total to us. Would VAT be applied to this?
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Should you charge VAT?

12/02/2019 10:40:42
Hi, we are a micro size company, voluntarily VAT registered, supplying land surveying staff. Some of the staff we provide are outsourced freelancers without VAT registration. Our payments from clients and to freelancers are as follows:

Our invoice to client:
Day rate: GBP300 + VAT

Invoice from non-VAT registered freelancer:
Day rate: GBP 300

Our loss: GBP 60 due to unclaimed VAT

Can we charge our clients without VATs on the staff we provide? Or can we claim VAT on a payment for non-registered VAT freelancers?

Thank you for your assistance.
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Should you charge VAT?

13/02/2019 10:01:12
Thankyou, I think I've got it now!
My business is based in the UK and will stay far under the 85k UK VAT threshold.
I sell exclusively digital downloads. Please can you check I have this correct.

UK B2B (or B2C) sales = no VAT charged.
(No Vat charged up to 85k despite having to be VAT reg to meet EU rules below).

EU B2B sales = Use EU Sales List to report these.
Use place of supply rules for electronically supplied services, reverse charge rule applies, under which the business customer must account for the VAT.

Unlikely but EU B2C sales – charge VAT at each EU country rate using place of supply rule.
Use VAT MOSS system here.

Other countries e.g. US ? No VAT charged at all?
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Re:Should you charge VAT?

13/02/2019 12:18:26
Hi,

In response to the question asked 12/02/19 at 12:06

Thanks for your question.

The rate of VAT you would charge on labour would be standard rate of VAT at 20% unless the work was being done on a new build or a conversion for example. VAT notice 708 explains when VAT on labour may be charged at another rate of VAT.

VAT notice 708: buildings and construction

I think we would need more information with regards to your second question, who is the winning company and why are they giving you 10% of the contract total? Does this form part of your payment for your service provided?

If it does then it would be a vatable. We would advise to have a look through our manual on supply and consideration.

VAT supply and Consideration - VATSC03510

I hope this helps.

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Re:Should you charge VAT?

13/02/2019 12:35:39
Hi,

In response to the question asked 12/02/19 at 10:40

Thanks for your question.

If you are providing a service to your clients that you charge for then you must account for VAT on this. As you are supplying a service and getting a consideration in return for this.

VAT supply and Consideration - VATSC02100

You cannot claim the VAT back on a payment for non-registered freelancers, they won’t charge you VAT on their invoice and any VAT they incur would not be able to be recovered by yourself as it wouldn’t meet the conditions in VAT Notice 700 section 10.

VAT guide - VAT Notice 700

I hope this helps.

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Re:Should you charge VAT?

13/02/2019 12:57:40
Hi,

In response to the question above dated 13/02/19 10:01

Thanks for your question.

If you are not VAT registered as under the threshold then you would not charge any UK VAT on any sales. You wouldn’t complete an EU sales list either as this is only required by UK VAT registered traders making sales to other VAT registered traders in the EU.

If you register for VAT as need to be registered for VAT MOSS - as above threshold of £8818 - and are under the VAT registration threshold of £85000 then:

UK B2B/B2C no VAT would be charged.

EU B2B sales – this won’t go on an EU sales list as you are only UK VAT registered to use MOSS and should be filling in nil VAT returns as below the threshold for UK VAT.

EU B2C Sales – you would account for VAT using VAT MOSS rules

Outside the EU – no VAT charged.

VAT rules for supplies of digital services to consumers in the EU

I hope this helps.

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Should you charge VAT?

14/02/2019 14:08:06
To above answer.. All my sales are digital downloads to other businesses.
I've sold nothing so far, so no VAT to UK until 85K and no VAT to EU till £8818 correct?
No need to do any VAT or Sales list at all then?
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Re:Should you charge VAT?

15/02/2019 07:55:49
Hi,

Thanks for your further question.

If you haven’t gone over the UK threshold then you don’t have to register and account for VAT here in the UK until you do.

If all your sales are to businesses then you do not need to worry about the EU VAT if you go over the £8818.

This threshold is for the sale of digital services to private consumers only and doesn’t include sales made to other businesses.

Please see the guidance below:

VAT rules for supplies of digital services to consumers in the EU

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Should you charge VAT?

15/02/2019 10:14:51
To above answer.. thankyou for your help.
I've spent literally 3 weeks on this problem going round in circles. For small businesses starting up - and selling to other businesses this is not clear enough on the HMRC website.

Q1: I've hear of a reverse charge taking place for EU sales - meaning that you don’t have to charge your customer VAT. When does this come into play?

Q2: I read somewhere that when selling digital goods you have to prove you were selling to Businesses in the EU, by collecting proof in the form of IP addresses, Business addresses etc - and if you couldn't do that you had to assume they were customers.
Do I need to worry about this? And collect proof or not?
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Re:Should you charge VAT?

15/02/2019 13:29:36
Hi,

To answer your questions above:

1) Reverse charge comes into play if you are selling your service to another business in the EU, you would have to look at VAT notice 741a to make sure it doesn’t fall under any of the exceptions.

If it doesn’t then we class your sale as falling under what we call B2B (business to business) general rule. This means rather than you charging VAT to your EU customer they would account for the VAT where they belong.

Section 5 of this notice explains how this works.

Place of supply services (VAT notice 741A) - section 5

2) The best evidence you can obtain that you are dealing with businesses is if you can obtain their VAT registration number.

Section 6.3 of VAT notice 741a explains what sort of commercial evidence you should obtain to keep in your records that shows your customer is in business.

Place of supply services (VAT notice 741A) - section 6

I hope this helps.

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Should you charge VAT?

15/02/2019 15:43:16
In answer to above question.

O.k I don't have to be VAT reg to collect VAT numbers as proof then?
Thanks for your help
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Re:Should you charge VAT?

21/02/2019 10:20:57
Thank you for your query – we’ve passed this on to our technical experts and as soon as we have a response, we’ll post it here.
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Re:Should you charge VAT?

04/03/2019 12:31:20
In response to the question asked 15/02/2019 15:43:16.

Sorry, we have liaised with our technical experts on this and they are unsure on what the query is here.

As per the previous answer, the following link provides guidance on what evidence you would require in order to confirm your customer is 'in business'.

Place of supply services - VAT notice 741A - Section 6
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Should you charge VAT?

11/03/2019 07:33:41
Hi, the question to the above is :
I am selling digital goods to EU, B2B and I am not VAT registered. If the customer cannot give me a VAT number - can I collect other information as proof and assume they are a business? I will state this in my website terms that I sell only B2B. Would I get penalized if I later found out they were not a business?
Thankyou
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Re:Should you charge VAT?

12/03/2019 13:00:52
Hi,

Please refer to section 6.3 of VAT notice 741A with regards to what evidence you should obtain to show it is a B2B supply.

Place of supply services (VAT notice 741A)

I hope this helps.

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