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Vat on research

Vat on research

My company has been asked to complete some research for a company in the far east, and then write a short report afterwards.

Should we apply Vat to any money we receive from this company, or is it outside the scope, being a company outside the EEA?



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By afairpo
07th Oct 2011 11:47

What and where?

NOTE: the following is general information, please get specific advice from your tax adviser. 20% plus penalties and interest can be quite a lot of money if you get it wrong.

I assume you're registered for VAT already?  If not, then you only need to worry about VAT if this is going to take you over the VAT registration threshold.

The VAT treatment depends on where the services are considered to be supplied for VAT purposes, and so the answer will depend on various things:

What sort of research are you doing? If it's scientific testing and experiments (but not providing recommendations or conclusions) then it's a UK service regardless of where the customer is based and you would need to charge the customer UK VAT at 20% (or at least account to HMRC for that VAT).

Otherwise, who has the benefit of the services? The following assumes the company is in business, so that it's not part of a charity or government etc. If it's not in business, the service is subject to UK VAT.

If the company has no UK presence at all then the services should be outside the scope of UK VAT. 

If the company has a UK presence, then you need to look at which part of the company is most directly connected with the services: if it's the UK presence, then the services are subject to UK VAT.  If it's the Far East, then the place of supply is outside the UK and the supply is outside the scope of VAT.

[edited to add: the subheading on the main page has a note about the company being a sponsor, but that's not mentioned anywhere in the question on this page.  If you are being sponsored by the company and providing the research services in return then that's still potentially a VATable supply, depending on the points above.  In this case, presumably you would be getting a fixed amount of sponsorship money instead of charging for the services: if it's a VATable supply, then you have to account to HMRC for VAT from the sponsorship money].

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to petersaxton
07th Oct 2011 12:00





My company is Vat registered.


Sorry, I said sponsorship, but it is in the early stages and they have offered some money to research and write a report of domestic housing in the UK.

It would only be the business that would have benefit from the report and I can confirm that the company has no UK presence at all.


But from what you mention above, as they do not have a UK presence and the type of research being completed, then it is outside the scope of UK Vat.



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