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UK Business to Isle of Man business VAT

Does a UK Registered business needs to charge and pay VAT on payments from IOM business?


My company is registered in the UK and i provide advertise space on websites to a business registered in IOM. The business in IOM has it's parents company in British Virgin Islands and Cyprus but i send invoices to the IOM address and they are VAT registered in IOM. 

My accountant advise me that i do not need to register for VAT because i am outside the scope of VAT.

I only have two clients.

1. Google which sends payment from Ireland.

2. This company which sends payment from Cyprus but i send them invoice to their Isle of Man company.

I've never paid for vat on their payments, and never charged them VAT because i am not VAT registered.

I read many links, and it is seriously confusing.

Do i need to register for VAT and pay VAT in the UK on payments i receive from the IOM business even though i have no sales in the UK or is it going to be zero rated because they deal with their own vat and i am supplying services outside the UK to a vat registered business in iom?


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22nd Oct 2017 23:28

For practical purposes you can regard the Isle of Man as part of the UK for VAT purposes. There are some differences but it is the IoM entitlement to recover not the UK/IoM obligation to account for VAT.
If your turnover is more than the current registration limit (whether your customers are UK/IoM or EU) then you should register. Sales outside the EU can be ignored as being outside the scope of EU VAT but the IoM is inside the EU and the UK for VAT purposes...

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By aspmxka
22nd Oct 2017 23:48

Thanks for the info.

So this means i should register for VAT in UK because my turnover exceeds the 83k threshold.

And then, do not charge the IoM company VAT because they deal with their own stuff?

I was under the impression that if i register for VAT i will have to add 20% chargeable to them on the invoice.

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23rd Oct 2017 09:07

You should charge VAT on all your UK sales (IOM included, as it is part of the UK for VAT purposes).

You can then recover input VAT incurred on all your UK purchases and offset this against your VAT that you are charging on your sales.

Your accountant is best placed to advise on submitting a VAT Return and registering your business for VAT.

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