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Reclaiming VAT

Reclaiming VAT on cost of sale when the sale is outside the scope of UK VAT.

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Situation

UK events company provides consultancy services (stage, lighting and sound design) to an events production company based in Thailand putting on a festival in Thailand. The UK events company is registered for VAT in the UK but does not charge VAT on its services to the Thai business because the place of supply between the two businesses is Thailand and it is therefore outside the scope of UK VAT.

Question

The UK events company engages a UK PR agency to undertake PR work to promote in the UK the festival taking place in Thailand, the PR agency charges the UK events company VAT. Can the UK events company reclaim the VAT it has paid to the PR agency or not?

As stated above the UK events company is registered for VAT in the UK but as the PR agency’s services being paid for are related to an event that is taking place outside the UK and therefore outside the scope of UK output VAT is the input VAT on the PR agency’s invoice non-reclaimable?

Replies (7)

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By jonharris999
30th Jun 2020 18:23

I vote no. I don't see why it isn't reclaimable. The supply by the PR company was of services in the UK to a UK client. I don't think it matters at all what they are PR'ing about.

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Replying to jonharris999:
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By Paul Crowley
30th Jun 2020 18:30

Same here

I have one exporting services to Switzerland. Took 2 years to get client to register as apparently prior big clever expensive firm said not allowed to register.
Backdated 4 years

Thanks (1)
Psycho
By Wilson Philips
30th Jun 2020 18:36

No - it is reclaimable.

The legislation specifically provides that Input VAT is recoverable in respect of outside the scope supplies that would have been taxable had the place of supply been UK.

Thanks (3)
chips_at_mattersey
By Les Howard
30th Jun 2020 19:34

Casting vote?
Yes, input tax is recoverable. (Well tucked away in the guidance!)

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Replying to leshoward:
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By Paul Crowley
30th Jun 2020 21:04

As always
much appreciated

My guy needed to talk it through with HMRC VAT as backdating, hence reasonably confident. But then who really can trust HMRC VAT to be consistent?

HMRC VAT tend to argue directionally. They will in tribunals argue contrary to their last tribunal if they think there is a profit to be made

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RLI
By lionofludesch
01st Jul 2020 13:48

Of course it's recoverable.

Outside the scope isn't the same thing as exempt.

Thousands of MOT stations rely on it.

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By Archie-Bald
01st Jul 2020 17:47

Thank you to everyone who has replied - really appreciate you taking the time out of your no-doubt very busy days to read my question and then offer your opinions.

Thank you.

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