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is VAT charged from UK to UK business re US hotel

is VAT charged from UK to UK business re US hotel

Hello everyone

We are a UK VAT reg'd company and so is our customer.

Question is whether VAT should be charged on our invoice to them in relation to various contractors/engineers staying in a US Hotel - the amount is not insignificant.  The costs include Accommodation, Hotel Services and Group Meals plus local taxes.  The majority of the engineers are employees of our customers and we usually handle/process some of their procurement

HMRC VAT helpline havent given clear guidance or direction and external accountant is also unsure and is now looking for guidance.

Just wondered if anyone knowledgeable could point me in the right direction / VAT notice / advise

Thanks

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By BER
20th Sep 2018 12:46

You could just charge VAT on the whole lot, they can reclaim it. However, if you are booking accommodation on behalf of customers be careful you don't fall into the Tour Operators Margin Scheme (TOMS).

Your better bet may be treating the costs relating to their staff as disbursements (particularly the hotel costs), meaning you would be able to pass the cost through without VAT being charged. See https://www.gov.uk/guidance/vat-costs-or-disbursements-passed-to-customers

Any costs relating to your company/employees providing services would need VAT charged, I would also charge VAT on the group meals, but by at least splitting out the accommodation charges as disbursements you should avoid TOMS.

Thanks (1)
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20th Sep 2018 13:58

thank you for your reply and assistance
HMRC also hinted at TOMS - but we did not arrange hotel booking nor is it our usual business

Not sure if makes any difference, our customer booked the Accom and it was their staff using hotel facilities etc

We are (hopefully) simply paying the hotel on the cusotmer's behalf. We then invoice our customer plus a small %age as handling/admin so don't think it falls as 'disbursements'

My temptation is to charge our customer on zero rate basis. Just struggling to find anything to confirm or deny (other than place of supply of services)

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By BER
to An4Group
20th Sep 2018 16:08

The fact that its not your normal business wouldn't matter for TOMS as the 'incidental' exemption specifically excludes accommodation. However, if you are saying that your customer booked the accommodation in their own name, then you won't fall into TOMS as it only concerns bookings made as a principal or undisclosed agent.

I can't see any reason you'd charge zero rate VAT - arranging hotel accommodation is not land related, so place of supply for services is where your customer is located, which is the UK - so UK VAT applies.

Can you not raise one invoice which passes the hotel costs through directly as a disbursement with no VAT; and then a second invoice for 'administration charges', with VAT charged on that element only?

Is there a reason you're trying to limit the VAT charged when the customer is VAT registered?

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By BER
to An4Group
20th Sep 2018 16:09

- Duplicate -

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