Dear all
I have a client, whom is a self-employed sales agent for a Canadian corporation.
He is responsible for UK, Rest of Europe and Africa, and so will visit customers and potential customers in these areas on behalf of the corporation. So in any month, he could be spending at least two weeks out of the country in Spain, France, Morocco or wherever.
His income is essentially a monthly fee plus disbursements, which to what I have seen is basically a monthly fee, same every month and an expense account. Apart from the obvious concerns about his employment status.
He is VAT registered (as his monthly fee on an annual basis will exceed the turnover threshold alone) and my question is the status of his fee billed to the Canadian company for VAT purposes? Standard rated?
Many thanks for any help....I really do have a dislike of VAT!
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Replies (2)
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Not SR
The client is making a supply of services to a non EU client. Under the place of supply rules, they are provided where the customer is resident and would therfore be zero rated for UK VAT.
In fact, there is no need to have registered in the first instance as for registration purposes the supply of these services is regarded as being outside the scope of VAT so wouldn't take him over the registration threshold. I have a client in exactly the same position and we agreed this with HMRC before he started.
The fact that he has registered isn't a problem, because it is permitted as long as he receives taxable supplies from UK businesses, but in the case of my client he felt that the amount of input VAT that he might recover wasn't worth the hassle.
Simples
Current rules came into effect on 1 January 2010 and one important aspect is that it is a B2B (business to busines) suppy, therefore the above rules now apply.
Completely the reverse (transaction deemd to take place in UK) if it is a B2C (business to customer) supply.
As stated, the supply is outside the scope of UK VAT but, to be absolutely accurate, is not regarded as "zero-rated". The supply simply does not attract VAT.
This is, obviously, why I love VAT.