I have a client who I am confident has breached the DSR Thresholds in most of the European countries. Thinking on the issue as it stands I am expecting that they will need to correct their affairs. However, what is the procedure in completing a DSR VAT Return for another EC country?
My issue is:
Outputs/Inputs declard on UK VAT Returns.
Expect that Client will need to make correct declarations and revised all UK VAT Returns.
Calculating what Output VAT would be due to each EU Country would be simple enough. But what about the Input VAT? Is the Input VAT applicable to the Sales in other EU Countries recoverable in the UK, or is it Outside the Scope and should actually be reclaimed in the country in which the respective sale is made? For clarification, the goods are delivered here to the UK and then sent via courier to the Customer.
Any input gratefully received!!!
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Replies (1)
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First, the client would need to register in each of the countries in which he exceeds the DSR threshold. So, he will need to deal with each individual country or hire someone locally to assist him. I guess that languages could be a problem, except for Ireland.
It might be easiest to register now and not back-date anything - I am not sure who polices compliance with the various thresholds or what the consequences for late registration are. (But how would France or Germany find out that you had sales of more than €100,000 in either one unless the UK told them? Does the U.K. check these things?)
Regarding input VAT: My understanding is that if you have bought the goods in the UK, you continue to claim the input VAT on your UK return. This may mean that your UK liability is significantly reduced or turned into a repayment claim.
If you bought the goods from an EU supplier, you don't have any input VAT and continue to make the notional adjustments on your UK return.