My query to all the VAT specialists out there.
My client provides services to its foreign customer in the EU.
Easy enough so far - deemed supply of business to business services is in end customer's jurisdiction. End customer to account for VAT. My client's invoice reflects as VAT being outside scope of UK VAT.
The issue was recently complicated when my client hosted an event for the foreign customer here in the UK.
Are there any conflicting opinions to what I've proposed for my client:
- Despite the event being located in the UK, the event still consitutes services, and therefore are deemed to be held in foreign customer's jurisdiction;
- My client has received invoices in sterling (for sake of example worth 120 GBP) with Vat on from suppliers to the event. These have been paid by the client, and can be claimed in the client's VAT return for the period (20 GBP).
- My client will issue an invoice to it's foreign customer for 100 GBP (on the basis that they are only recovering costs).
- Is my client exposed to any risk of HMRC not allowing the VAT claim on the expenses, or more importantly, deeming the supply of services to be partially exempt?
I'd appreciate any comments.
Replies (6)
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General Rule Services
You have determined that the services are 'General Rule' services, and therefore no VAT is charged by your Client. The place where the service is performed does not affect the Place of Supply.
Where the suppliers have charged UK VAT (presumably), then input tax is recovered; Again, this is not affected by where the event actually takes place.
I don't see any risk of HMRC action. And there is no Partial Exemption issue - the services are not exempt in this instance.
You need to be very careful here, as depending on what the event was, the place of supply may be the UK, irrespective of where the customer is based. You will need to read the below to deem which is relevant to your case.
I only mention this , as we had a VAT inspection and were required to pay back backdated VAT with interest on training courses we had run for a couple of EU/non EU companies. And then charge VAT to any future customers.
http://www.hmrc.gov.uk/manuals/vatpossmanual/vatposs08254.htm
http://www.hmrc.gov.uk/manuals/vatpossmanual/vatposs08256.htm
Not General Rule
This supply is outside of the General rule and the place of supply will be the UK especially if there are supplies of catering etc provided.