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US DOLLAR INVOICE CHARGED UK VAT

Hi Everyone,

We are a UK Business and deal with another UK business who has just invoiced us in US Dollars, and charged us VAT. Just wanted clarification if this is correct? I thought that an invoice which was subject to UK VAT needed to be in GBP so we both had the same exchange rate.

Thank you

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US Dollars and VAT

Just a couple of queries

1. Could it just be an innocent mistake?

Have you asked the supplier whether or not they meant to invoice you in US Dollar. It may be that they have set US dollars as their default currency mark on their accounts program and not changed it. I have  a client who sent the currency rate to Danish Kronar and all their statments come out with customers owing X,XXXXDk.

2. that said on the face of it we have a UK company supplying another UK company and hence, VAT is chargeable.

 

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Yes

 

Yes I have asked them why we were invoiced in US Dollars and her answer was 'Talk to your accountant or go to college!! I havent got time to explain it' So i assume she meant to invoice us in USD but have no idea why ?

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The currency is irrelevant

If it is a taxable supply in the UK, VAT is chargeable.

The additional requirement of invoicing in a foreign currency is that the invoice must state, by way of memo, the £ equivalents of the net amount and the VAT so that you, the customer, will indeed use the same rate of exchange.

Failing that, use the exchange rate published by HMRC for VAT purposes at customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal

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