Hi all!
Thanks for taking the time to read this!
To put this in a scenario UK resident VAT registered company 'A' receives a supply of legal services from German resident NON-VAT registered sole trader 'B'. Does 'A' have to account for the supply of services from 'B' under the reverse charge rules?
My understanding is the reverse charge mechanism does not apply to zero-rated or exempt services, but would like clarity on non-registered non-UK suppliers. I expect 'A' does not have to but would appreciate the input (and any links if possible!).
Best regards,
Coeus.
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It's not possible ...
It is in practical terms impossible for a German trader to not be VAT registered. The threshold is minimal and normally all German businesses (incorporated or not) get a VAT number on day one. (some exceptions for VERY small seasonal traders and tiny farmers).
Therefore, unless you are provided with a valid VAT number you treat the "seller" as a consumer (which he probably is) ie without VAT at all.
No reverse charge
Any person (sole trader included) carrying on an 'economic activity' can be a taxable person. So it's a B2B situation within the EU.
Notice 741A: 18.10.2 :The reverse charge does not apply to exempt services or zero-rated services.