I am getting a lot of different answers to this question.
Services provided to the USA are 'out of the scope' of VAT, but does out of the scope mean not to include it in box 6? Or to Zero rate so it is included?
I have pulled this off HMRC website:
'If the place of supply of your service is not in the EU you don’t have to charge EU VAT but you should include the sale in box 6 on your VAT Return.'
Please, some clarification.
Thanks
Replies (5)
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Yes it is outside the scope.
Yes it should go in box 6
'Show the total value of all your business sales and other specific outputs. Some examples are:...
supplies which are outside the scope of UK VAT as described in VAT Notice 741A: place of supply of services'
From https://www.gov.uk/government/publications/vat-notice-70012-filling-in-y...
HMRC require it to be included in box 6.
To my mind this is however quite illogical. If it is outside the scope, it is outside the scope and so has no business being on the VAT return.
There is some logic to this - while the supply is outside the scope of VAT (VATA 1994 s.26 (2) (b)), you are allowed to recover the associated input tax, effectively making the treatment the same as a zero rated sale.
This is how a Zero rated sale would be shown on the return, which makes HMRC's ratio analysis consistant.
Maybe but as you exclude Outside the Scope supplies from calculating taxable turnover why should you include it in box 6?
If it is outside the scope then it isn't subject to UK VAT regardless of Input VAT recovery.
why should you include it in box 6?
Because HMRC ask you to. I suspect they want it more for risk management than theological reasons. there are, I suspect, a number of businesses that don't distinguish accurately between zero rated, exempt & o/s scope. Box 6 just indicates total sales (assuming it is filled in correctly) is there to give an idea of scale...