Why do we reverse charge services outside the EU?

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I know (well I hope it is correct), that services received from outside the EU, say USA, still need to be subject of the reverse charge. Obviously the VAT has a nil effect. But why do we do this? Why are we including services on the vat return outside the scope of UK and EU VAT?

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By shaun king
28th Apr 2017 11:32

Because not every business can deduct all the VAT charged to it - Banks, Insurance companies, Financial Services etc. If you didn't have the reverse charge be cheaper buying a service from outside the UK or EU rather than from within the UK with 20% VAT charged on it.

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By ireallyshouldknowthisbut
28th Apr 2017 12:03

The good news is if you have a normal business and you can claim back all the VAT and you don't bother............you can get fined for zero pounds for such a lapse. Worst case if a slap on the wrist and told to do it in future. Of course you will.

its another one of those pointless things that people do because the legislation says you should. Bit like religiously filling in P11D's for small company directors without proper dispensations being in place. Technically correct, in practice HMRC cares not a jot if there is no tax due.

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By Dick Stastey
28th Apr 2017 14:40

The services are not outside the scope of UK and EU VAT. That's the point. The place of supply rules are saying that they are supplied in the UK for VAT purposes.

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