VAT - Electronically supplied services and broadcasting services

VAT - Electronically supplied services and...

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One of my clients operates a web hosting company aimed primarily at SME's within the PC supply chain.

Actual hosting takes place in India (used to be the UK), normally invoicing isn't a problem as both customer and supplier are UK based and therefore no question about VAT rate.

However, one of his clients is a Singapore based company who has no establishment anywhere within the European Union. They are arguing that they should not be subject to VAT as neither they nor the supplied services are within the European Union.

Can anyone enlighten me as this is outside my zone of confidence for VAT. I've consulted what I believe to be the relevant HMRC VAT notice, but can't make any sense of it with respect to the above situation.

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_CL_000902&propertyType=document

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Euan's picture
By Euan MacLennan
06th Jan 2012 14:03

What is not clear?

The link you give says under Who is affected by these changes?:

If you are a UK supplier of these services, you will no longer be required to account for VAT on supplies to:

businesses in other Member States ornon-EU customers (except, in certain circumstances, where they are used and enjoyed in the UK).

So, your UK client should not be charging UK VAT on web-hosting services supplied to business customers in any other country apart from the UK.

In this case, the services are treated as supplied in Singapore where the customer belongs. An EU customer would have to account for VAT in his own country under the reverse charge rules, but I have no idea if a customer in Singapore has any obligations under the local equivalent of VAT.

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Replying to jon_griffey:
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By frustratedwithhmrc
06th Jan 2012 14:30

Thanks Euan

Euan MacLennan wrote:

The link you give says under Who is affected by these changes?:

If you are a UK supplier of these services, you will no longer be required to account for VAT on supplies to:

businesses in other Member States ornon-EU customers (except, in certain circumstances, where they are used and enjoyed in the UK).

So, your UK client should not be charging UK VAT on web-hosting services supplied to business customers in any other country apart from the UK.

In this case, the services are treated as supplied in Singapore where the customer belongs. An EU customer would have to account for VAT in his own country under the reverse charge rules, but I have no idea if a customer in Singapore has any obligations under the local equivalent of VAT.

Thanks Euan. I had in fact read that bit, bit wasn't sure that my interpretation was correct.

From a GST perspective (Singapore VAT equivelent), yes they may have to do a reverse charge, but there is a bit of a difference between 7% GST and 20% VAT especially if they can't reclaim it. Just need to get it removed from the UK invoice.

As a matter of interest, what confirmation (if any) should we request from the Singaporean client to prove that they are registered outside the UK / EU and therefore not liable for VAT?

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Euan's picture
By Euan MacLennan
06th Jan 2012 17:09

Overseas confirmation

I don't think that there is any requirement for them to be registered for VAT outside the UK, although confirming that their Singapore GST registration number (if there is such a thing) is valid would be incontrovertible evidence of their belonging in Singapore.

Otherwise, you just need some business stationery from them or some other evidence that they are based in Singapore.  It is not a requirement to have specific identification, but just some confirmation that they belong in Singapore.

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