I am trying to find the easiest way of explaining this.
We are based in the UK. The customer at the end of this transaction is based in Italy, and the transaction relates to consultancy services offered to them, regarding land in Italy.
If it was as simple as that, I wouldn't be asking for help. I know that if we were dealing directly with them and they were our customer we wouldn't charge VAT under the DTA.
However, this customer isn't OUR customer. They are a customer of another consultancy based in the UK. We are that consultancy's sub-consultant.
I assumed we would invoice our hours plus VAT to the other UK consultancy. The VAT we collect gets paid to HMRC. That UK consultancy would claim back the VAT from HMRC as they can't charge UK VAT to the customer in Italy. So whether we charge the other UK company UK VAT or not, it makes no difference to HMRC as we either charge it and it gets claimed back by the others, or we don't charge it and we don't pay it over to HMRC and it doesn't get claimed back by the other UK consultancy. HMRC's balance always ends up as Zero.
I assumed that the other UK company would then invoice the customer in Italy under the DTA, and the Italian customer would pay the Italian VAT to the Italian authorities. However.....
I have been told by our accountant that even though the Italian company isn't our customer, as it relates to land in Italy, we still can't charge UK VAT. I'm OK with that. I thought I would just not charge UK VAT, the other consultant wouldn't claim UK VAT from HMRC and they would do the DTA thing with Italy.
But no.... I have been told by our accountant that we need to register for Italian VAT, then charge our UK customer Italian VAT, they will have to pay it to us, then they will need to make an EC VAT refund claim via the .gov website. We will need to pay the Italian VAT collected, to the Italian authority. As the other UK consultancy is issuing a non VAT DTA invoice to their Italian customer, the Italian customer just proceeds as normal.
Surely "as normal" means the Italian customer would pay the tax that wasn't charged, over to the Italian authority? Which would mean that they are paying Italian VAT and we have paid Italian VAT.
Obviously, somewhere along the line I have misunderstood something, because it just doesn't make sense. Every time I go back to the accountant and ask for clarification, they just ping me screen shots from the .gov website or links to guidance notes. If I understood that kind of thing I would have been an actual accountant but I don't and I'm not. Yet with every answer comes a bill. So I'm fed up with asking them, I am now asking you for help.
Many thanks in advance.