Are sales outside of scope of VAT?

Are B2C Sales of carbon credits to overseas non-eu customers, outside the scope of VAT?

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We've determined (via online research) that B2C Sales of carbon credits to overseas non-eu customers are outside the scope of VAT, is this correct? And if so, should they appear in box 6 of our VAT returns? We use QBO, but are unsure what VAT code to use as No Vat would seem appropriate but doesn't put the transaction on the return, so should we use Zero-rated?

We haven't gotten around to appointing a new accountant yet (previous one passed away!), so don't know how else to get a definite answer.

Thank you all.

Replies (10)

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Ivor Windybottom
By Ivor Windybottom
01st Aug 2023 14:21

Have you read the HMRC manuals at:

Certain credits are capable of being consumed and so are a VAT-able supply of services, whereas "voluntary" or made-up credits are not (per

Presumably the usual "place of supply" rules for the B2C supply of services would be relevant.

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By Jason Croke
01st Aug 2023 15:10

Your very first post when joining this forum indicated you were starting a practice (AML question), there is an assumption you should be able to answer the more generic accounting queries or else able to find it yourself through Google/HMRC Notices, etc.

Sorry to be difficult but your post says you "don't know how else to get a definitive answer" - this forum cannot give definitive advice - and you could have just Googled "What sales goes in Box 6 of a UK VAT return" and found this link and jump to section dealing with Box 6 which answers your question.

Hopefully the link will answer your question, can't really give a definitive answer as don't know what type of credits you are selling or in what capacity you are asking the question (as an Accountant or as the business selling the credits). Your previous query related to VAT too, child care exemption, which further indicates you are no longer in practice and should appoint a new Accountant as soon as possible.

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By Hugo Fair
01st Aug 2023 15:12

- 2 years ago you were "running my own practice"
- 1 year ago you were setting-up a new (nothing to do with accounting) business
- now you "haven't gotten around to appointing a new accountant yet (previous one passed away!)"

I've no idea who you are or what you do, but when put together the above points suggest that it's time you got things on a professional basis - particularly if you like getting into poorly defined areas (like carbon credits or crypto or ...).

EDIT: I see that Jason has got there before me - and makes the point better!

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Replying to Hugo Fair:
By Tax Dragon
01st Aug 2023 15:23

So you're a minute quicker than me, Jason 2 minutes quicker than you... I'm feeling very slow today.

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Replying to Hugo Fair:
By Jason Croke
01st Aug 2023 15:29

I can type slightly faster!

I've a couple of clients who came to me because their previous Accountant died, it does happen, but they came to me within a couple of weeks of the death and they didn't make any business critical decisions in the meantime.

Saying "My Accountant has died but I need an answer now" is exactly the same as saying "I don't have an Account but I want an answer now", either way there is no Accountant, but a dead one adds an element of emotion to the equation to elicit a more desirable response, but either way the answer is the OP needs to get a (new) Accountant before they make errors which will only cost more to fix in the longer run.

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By Newbie In Town
01st Aug 2023 18:30

Thanks to some of you for at least attempting to provide a useful answer (particularly Ivor Windybottom).
Thanks for nothing except judgement from others (particularly Hugo Fair), who know nothing of the situation that has brought me to ask this question. It’s none of your business but in an effort (although I dare say it will be wasted!) to at least make you think for a split second about whether you should pass judgment without knowing the facts;
A couple of years ago I was in the process of starting a bookkeeping practice (I’m not an accountant), hence the question about AML but decided not go ahead with it for personal reasons. Whilst looking at other opportunities I was approached by someone with an opportunity to come in on their school outdoor adventure business, so I was doing a bit of research into this. Recently we’ve diversified into selling voluntary carbon credits (and it’s all above board). Now we’ve come to the time where we need to prepare our first VAT return for the new business, we reached out to our accountant to ask them this question, only to receive the sad news of his demise. This was just under 2 weeks ago, so we haven’t been had the time yet to find a new one.
So, apologies @hugo fair if my not just jumping into business opportunities without conducting a bit of research first and asking a few questions offends you. Perhaps forums aren’t where you should be “hanging out” if you don’t like people asking questions.

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Replying to Newbie In Town:
By Hugo Fair
01st Aug 2023 20:46

".. who know nothing of the situation that has brought me to ask this question. It’s none of your business .."

Quite agree ... but then nor is it our business to offer you answers - especially when you seem to think that withholding relevant facts is a sensible thing to do!

Frankly I'm amazed that you feel I was' passing judgment' previously, but you are now encouraging me to do so. This isn't a counselling service ... so I might as well say that I'm offended by your interpretation!

Have you considered why you are displaying undue sensitivity to perceived insults that weren't even made? [I've no idea why you're so keen to assure me that your latest business is "all above board", given that I never suggested otherwise.]

Anyway I stick by my suggestion "that it's time you got things on a professional basis" - which seems to be a common theme from other responders (who, despite what you may think, are saying this to be helpful and save you from pain).

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Replying to Newbie In Town:
By stepurhan
02nd Aug 2023 13:20

Newbie In Town wrote:
Perhaps forums aren’t where you should be “hanging out” if you don’t like people asking questions.

Perhaps forums aren't where you should be posting questions, if you are so easily upset by critical answers.

This is a public forum and, within the site rules, respondents can answer questions however they wish. Your explanation of your circumstances is irrelevant, since we have no way to know if any of it is true or not.

But, accepting it for the moment as true, why haven't you found the time to get a new accountant? As evidenced by this very question, having an accountant that you can ask these technical questions is business critical for you. I'd have made it a top priority if I was in your position. Relying on people you don't know on the internet (hint, anyone can join this forum) for something that could have a major impact on your business does not strike me as wise.

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By DKB-Sheffield
01st Aug 2023 19:28

Please correct me if I'm wrong...

- VAT Return due 7th August
- Accountant passed away c. 15th July
- VAT Quarter ended 30th June
- 1st sale before 30th June
- New business commenced even earlier

There must be at least 2 months since you started planning this!

Assuming you determined the correct VAT treatment before making the first sale, and took paid-for (written) advice prior to that... the answer to your 'Box 6 question' can be found by reading that advice (from mid-June, or prior) in conjunction with Jason's link.

Clearly, the VAT box is not the main issue. Determining the correct VAT treatment of the supply before transacting IS. The VAT box is the reporting of the correct VAT treatment. You seem a little unsure of the VAT position (researched online - where?) which is why you don't know the correct VAT box.

As others have said, including the specialists, this is a little murky in the VAT field (as opposed to selling standard rate goods to UK consumers) and in no way suited to a forum. Overseas transactions, carbon credits... a VAT specialist (not a sausage factory accountant) could be a wise investment.

FWIW... a good piece of advice for the future... Step 1... decide what your business will do. Step 2... understand the tax treatment fully. Step 3... decide what your business will do (based on the 'tax facts'). Never leave the tax considerations 'til last!

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By Tax Dragon
01st Aug 2023 19:42

As OP says, passing judgment without knowing the facts is unwarranted.

By the same token, giving advice without knowing the facts is impossible.

Tax depends on facts.

Consequently this is not, cannot be - and, therefore, logically, never will be - an advice centre. It's a forum.

Some people try to help. I'm one of them, sometimes. Hugo and Jason moreso. But, honestly, if someone needs fact-specific advice (and as tax depends on facts, "needs advice" fairly describes most OPs)... well, you do the maths.

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