I have a (sole trader) client who is not VAT registered and is not required to be as his taxable turnover is under the registration thresholds.
He's about to do some work for a client in Spain and part of the conditions of payment by the Spanish client are that he has to provide a Tax Residency Certificate to avoid the deduction of local taxes, which is obviously fine, but they are also requiring him to provide a European Intracommunity VAT number and have advised they will not process invoices or payments without one. They are also suggesting that this obligation is enforced by "the European Tax Authorities" and is not therefore up to their discretion to make any exceptions.
Does this sound right to you worldy wise people out there?? My client needs to register for VAT in the UK, to be able to invoice and receive payment from a client in Spain, when the invoice will be for B2B services and therefore not actually attract a VAT charge anyway? And in the meantime, will have to start charging all his UK clients VAT and go through the rigmarole of MTD compliant VAT returns...
It all seems a bit bonkers to me...!