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Client EU Customer Insists on VAT Registration

Can we find something to prove client does not need to be UK VAT registered to supply EU Services?

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A client of mine is having issues with a client of his. He is a Ltd company contractor for services and is dealing with an EU business. He is not UK VAT registered and does not need to be (based on current rules). However his client is refusing to pay his invoice without a valid VAT number. Despite my best efforts to explain he does not need to a) be VAT registered b) supply a VAT number to get paid they are still insisting and are asking him to point to an article of law that says he does not need to provide a VAT number. Anyone got any nifty links to something like this?

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Replying to mrme89:
By Ruddles
13th Jun 2017 12:55

More relevant I suspect would be Article 9(1) of the 2006/112 Directive, which defines 'taxable person'.

To be read in conjunction with Article 44.

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By shaun king
13th Jun 2017 15:17

You can read as much legislation as you like but a number of Member States refuse to allow businesses to trade intra EU unless the supplier is VAT registered in his own country. I am guessing this might be a Spanish company.

From a long and bitter experience the UK company will have no alternative but to register for UK VAT if it wants paying by its customer.

I know its wrong BUT the rest of the EU assumes that everyone who is in business should be VAT registered and you receive a financial penalty if you trade with a non VAT registered business.

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Replying to shaun king:
By Ruddles
13th Jun 2017 15:33

Thanks, Shaun. I was about to add to my post the point that regardless of how UK applies the legislation, if a foreign jurisdiction chooses to apply it differently, and require a VAT number, there's not a great deal that one can do about it. You saved me the trouble :)

What is so frustrating in cases like this is that regardless of the VAT status of the UK supplier the overseas customer (assuming he is a taxable person) will have to account for VAT locally under the reverse charge. It therefore matters not a jot whether the supplier is registered in the UK. But that's European bureaucracy for you - roll on Brexit.

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By shaun king
13th Jun 2017 22:34

Ahh but other Member States say that this mechanism prevents no VAT registered businesses supplying goods and services in the EU.

So no tax loss in the hands of business undertaking a reverse charge but potential VAT loss if the supplier wasn't VAT registered in their own Member State.

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By The VAT Doctor
13th Jun 2017 22:42

The EU business is wrong of course, but as we know, they don't like us, trust us, don't vote for our rubbish songs, beat us at football, steal our sun-loungers and so I agree with Shaun!!

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Paul Layte
By Paul Layte FCA
14th Jun 2017 08:44

Thanks all for the replies, even the lazy one.....I have already sent those low hanging fruit links previously it was more a case of anything further I could add in UK or EU law. Sounds like others have found frustration here regardless of legal right/wrong which is very helpful to know as it is not much hassle to get the client to FRS VAT register just a bit more admin for them. Thanks again all.

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