VAT Mind-bender! Challenge of the week!

A UK based firm, recently established and submitted its first VAT return after three months. The return merely included input tax paid on the property purchased (VAT reclaimed £25 000) as no sales were made in this initial setting up period.

It is now selling and faces some confusion over what (if any) VAT to charge and the possible knock on effect to the reclaim of the VAT paid on the property purchase.

The firm offers three services delivered in the UK to both UK and EU clients - English as a Foreign Language (EFL), professional (business) training (including arranging work placements) and management consultancy. Some of the time it acts as in an intermediary capacity sourcing deliverers of training on behalf of EU clients. Some of the suppliers of training are colleges of further education and educational charities and the purchasers in the EU are usually State Education authorities/schools who sometimes pay using a mix of European Funding (such as ESF) and national government funds.

The UK firm sometimes invoices the EU client for the costs of making the arrangements/commission and at other times invoices the actual deliverer of the training services (FE college or charity) which in turn invoices the EU client. To date the UK firm has not provided any management consultancy but expects to do so some of which may be government funded advice for small firms.

Any kind volunteers to untangle this one? Ideas greatly appreciated!!

Many thanks,

Malcolm
Malcolm Trotter