Hello everyone,
We face the following non-standard situation.
Services are analytic reports supplied by email to many companies that are based overseas. The contents of the reports is only of use to similar companies to our clients that reside in the same location. E.g. reports sent to companies in Mumbai are of no use to anyone else outside of Mumbai.
For these services we do not charge VAT according to paragraph 8.6. However, the HMRC requires to obtain the evidence (commercial or official) for a supply of goods exported outside the EC to be zero-rated for VAT. We have never dealt with non-physical goods export delivery, and have no clue of what sort of evidence we can efficiently supply to satisfy the HMRC. Paragraphs 6-6.5 on the Proof of Export do not help as they relate to physical delivery of goods.
Will an email serve as an "authenticated air-waybill"? But then it is delivered by a third party (email provider) and the email server which receives the information might be located somewhere else (say, not in India, the country of residence of the client), which is accessed by a client online. However, again our reports are of no use to any company operated out of the trading city of a client.
Has anyone ever faced a similar or identical problem? I appreciate very much any advice.
Really big thanks for any input.
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Replies (3)
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I think the services to outside of the EC are outside the scope of VAT rather than zero rated.
Goods or services
From what you say, HMRC appear to think you are supplying goods rather than services.
You should sort this out first.
Assuming services and your customers are presumably businesses, the place of supply would normally be where they are situated and your supplies would be outside the scope of vat.
Services rather than goods
I would argue that this is the supply of a service, rather than the supply of goods and therefore falls under the Reverse Charge. You should state on the invoice that the service is subject to the Reverse Charge and, for EU customers, quote their VAT number on the invoice.