To charge VAT or not, that is the question

To charge VAT or not, that is the question

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 I am getting confusing opinions as to whether I should have charged VAT on some work I did for a UK customer a while ago. Basically we are a design and animation business specialising in 3D animation. We organised an event in Ireland for our customer who is UK VAT registered. We are owed about £26k including VAT. Our client is not accepting that he should have been charged VAT as the service was supplied in an EU country. I do not wish to credit the portion of VAT and find out he is wrong. So what is the correct treatment of VAT here.

Incidentally the client is proving rather slippery when it comes to paying the "non VAT" amount anyway as they are experiencing cashflow problems. I am therefore left thinking he is wriggling out of VAT for cashflow reasons rather than because VAT is supposedly not chargeable. Does anyone know whether I should have charged VAT or not?

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By Ernest N Dever
20th Jul 2011 16:16

Not really enough info

You don't fully explain what the event was, nor when the services were performed or where those services were performed.  It's possible to perform services in one country in relation to an event in another.

Up to 31 December 2010 the place of supply for services relating or ancilliary to "cultural, artistic, sporting, scientific, educational, entertainment activities (including fairs and exhibitions)", including organisation, are where those services are performed (physically carried out).

With effect from 1 January 2011 that changes.  If the services relate to admission to the event, then the place of supply is where the event takes place, otherwise the normal B2B rule applies, and the place of supply is where the customer belongs.

So with respect to your event (assuming it's of the appropriate nature), services relating to the organisation of the event would only be supplied in Eire if they were performed there prior to 1 January 2011.  Otherwise, you would seem to have a UK supply.

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By thisistibi
20th Jul 2011 16:19

Place of supply

You you charged them for admission to an event (in Ireland) then the place of supply is Ireland, not the UK.  Therefore it would be outside the scope of UK VAT and probably within the scope of Irish VAT.  However, I am not yet convinced from your description that you are charging for admission to an event.  Perhaps you can expand on exactly what the service was.

I'm unsure why a UK business would have a problem with you charging UK VAT - unless they aren't VAT registered.  In that case, charging them Irish VAT instead of UK VAT is hardly going to improve their position!  One way or another some VAT is going to be due.

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