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VAT on recharges incurred in the USA

VAT on recharges incurred in the USA

Hi,

I have a client who has been on a business trip to the US and incurred expenses, hotel, car hire and meals, that are to be recharged to the company (based in the UK) who employed the services of his limited company which is VAT registered.

I understand the treatment if the expenses were incurred in the UK. The other company are insistent he should not charge VAT as the expenses are only subject to VAT in the US. Should he add VAT to all the costs when he invoices, or none? Personally I think he should add the VAT but I do want to be 100% certain.

Your thoughts would be much appreciated, thank you :)

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02nd Mar 2016 13:27

Yes.

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By Ruddles
02nd Mar 2016 13:29

Yes and 5 times yes

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02nd Mar 2016 13:30

Part of the supply of his services

The expenses are part of his taxable supply of services and therefore VAT should be added to these too.

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05th Mar 2016 10:13

Yes

Simon Gardner wrote:

The expenses are part of his taxable supply of services and therefore VAT should be added to these too.

.... and this is the correct rationale behind it.

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02nd Mar 2016 13:32

Excellent, thank you all.

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03rd Mar 2016 18:10

yes and also

The US expenses will probably include sales tax and that will be part of the total amount of expenses claimed. And there will be VAT on that too.

You did not say whether your client's client is VAT registered or not. If they are none of this makes any difference. If they are not they will be paying tax on tax!

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03rd Mar 2016 21:03

Yes

Comptable wrote:

The US expenses will probably include sales tax and that will be part of the total amount of expenses claimed. And there will be VAT on that too.

You did not say whether your client's client is VAT registered or not. If they are none of this makes any difference. If they are not they will be paying tax on tax!

 

Yes, they are all registered for VAT.

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By jcace
03rd Mar 2016 19:57

Place of supply questions need to be answered here, I would have thought, depending on the nature of the supply involved and the work done in the US.

An example from VAT Notice 741A of where a recipient of services has more than one establishment:

a customer has a business establishment in the UK and a fixed establishment in the USA created by its branch. The UK establishment contracts a UK company to provide staff to the USA branch. The supplier invoices the UK establishment and ispaid by them, The services are most directly used by the USA branch and therefore are received at the overseas establishment

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05th Mar 2016 09:27

Don't forget US filing

Your client's UK limited company has been doing business within the United States, so itself may wish to file a protective US corporate income tax return.

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14th Jul 2016 20:52

Hi again...

Just in case anyone is still receiving notifications for this post..

Can anyone clarify if the situation is different if the client is a business or an individual? It would seem, according to this blog http://www.brighton-accountants.com/blog/vat-uk-usa/ that there is a difference between goods and services, and also businesses and individuals.
HMRC have confirmed that a client should not charge VAT on services provided to a business customer. Is this correct?
I have never had a client undergo a VAT inspection, if the inspector took a different view, could they enforce the collection of the vat that should have been charged, despite the client having the call reference number and name of the agent he spoke with?

Any comments much appreciated, thank you.

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