Member Since: 29th Mar 2009
24th Apr 2017
Many thanks for the prompt reply.
If I've understood correctly are you saying that if the services were taxable if they were offered in the UK (e.g. from a UK VAT registered business) then the 'Reverse Charge' applies if the equivalent service is purchaced from a VAT registered business in the EU?
If correct then what is the process where the business offering the services is not subject to VAT (e.g. outside the EU with no EU VAT number) or in the EU and not VAT registered?
9th Mar 2016
FRS + CT
Very interesting discussion.
When I had a similar issue I contacted the VAT helpline and their response was: "We cannot recommend or give guidance on the Trade Sector, you have to decide based on the Trade Sector tables and your main business activity"
As for making a profit from FRS, it is my understanding is that if you do make any profit from FRS then this has to be accounted for in your accounts for CT.
14th May 2012
EOY filing + using Basic Tools
Hi John + All,
Interesting comment from HMRC "It is cheaper to mail everyone .... " and my thoughts:-
1. When they state it is cheaper, cheaper for who!? Do they take into account the subsequent number of calls from clients to their agents and to the HMRC helpdesk and the amount of confusion and uneccessary anxiety amongst businesses and the total time lost by all.
2. If they intend to send out a similar letter next year to everyone could I suggest they revise the letter to include: "If you have submitted your return and received a Correlation ID then this letter does not apply" or similar".
3. On receiving this letter I logged on to the HRMC online system to check the 2012 EOY filing status but it showed 'nil'. In previous years my EOY returns where completed by logging on to the HMRC online system but this year the HMRC Basic Tools software package was used.
Just to make everyone aware - If you use the HMRC Basic Tools software package to submit an EOY return then a successful submission will not show online as the two systems are not 'linked', as informed by the HMRC online support team. The only way you can check if it was successfully submitted is to open up Basic Tools, click 'Employer Database then click 'Online Submission'. This will display all previous successful submissions, including the Correlation ID, using the Basic Tools package.
2nd Jan 2011
Business not VAT registered - ESCL
The advice I have seen and reading the HRMC website:-
If client is deemed a Business and is VAT registered:
1. Include your own VAT No. on invoice
2. Include client VAT number on invoice
3. Include statement or similar: 'Subject to reverse charge in the country of receipt'.
4. Need to complete ESCL based on your VAT return period. No need to complete NIL return.
However the confusion for me is:-
1.If client is deemed a Business but NOT VAT registered.
2. HMRC advice is:-
If a customer claims to be in business but not to be VAT registered then alternative evidence should be obtained. This can be in the form of other reasonable commercial evidence or records that should normally be available eg contracts, business letterheads, a commercial website address, publicity material, certificates from fiscal authorities, etc. A digital certificate from a reputable organisation can also be used for this purpose.
3. Advice in an article on this website:-
You should only record on an ESL supplies to businesses in other Member States that are VAT registered and can provide a valid VRN. The amended Article 264 of the VAT Directive makes it clear that the customer’s VRN must be included on the ESL. If you make a supply to a business which is not registered for VAT in their Member State because it is below the registration threshold, but which has provided you with evidence that it is in business (for place of supply purposes), you should not include these supplies on your ESL because the absence of a VAT registration number would cause it to be rejected. However, in some cases receipt of the supply will result in the business being required to register in their Member State. If this is the case and a VRN is subsequently given to you, an amendment should be made the EC Sales List at that time.
**** I find this strange if the client is NOT VAT registered because:-
1. It would appear that if this invoice does NOT take the client over their countries VAT threshold then they do not pay VAT.
2. However if the client was in the UK or the supplier was in the same member state as the client then the supplier would charge the client VAT and the client would not be able to claim back the VAT.
1. I'm also still not clear how a 'Reverse Charge' Invoice to a client in another member state is included in the VAT Return or is it?
16th Nov 2010
FRS - reverse charge
This is the advice I was given by the HMRC vat support team.
However do you agree with the following scenario:-
1. UK company registered under FRS purchase services from non UK EU country and receive invoice stating 'reverse charge'
2. UK company under FRS do not include/account for invoice on vat return - Agree as per advice given by HMRC support team.
Qu1 - Does the UK company have to pay the vat and if so how do they pay it and account for it?
16th Nov 2010
FRS - I agree
Many thanks for the feedback.
I agree with your thoughts and this is certainly the case for purchase of goods in the UK as you are charged vat and except for certain rules vat cannot be reclaimed if registered under the FRS.
Effectively you can't claim input tax but the equivalent of output tax is reduced but calculated on revenue (net + standard vat) supposedly making vat accounting simpler
This is my point though as if the guidance I have received is correct, that is: you don't account/show 'reverse charge' on vat return under FRS then effectively you are not paying vat on goods received outside the UK but within the EU that are invoiced with 'reverse charge'.
To me this seems odd because I thought the idea of 'reverse charge' was that the purchaser of these type of goods had to pay the vat!
If you were registered under standard vat rules you would charge yourself for vat in box1 and recover the vat in box4
15th Nov 2010
Need clarification - 'Reverse charge relating to Flat rate Schem
I've received conflicting advice about how you complete online vat return in respect to 'reverse charge' when registered in the Flat Rate Scheme.
This specifically relates to Google Adwords in Ireland who send UK vat registered companies an invoice stating 'reverse charge'.
I was informed that any 'reverse charge' should not be included and was quoted Notice 733 section 6.4. which does state that 'reverse charge' should not be included.
The statements below are all from the HMRC website relating to the FRS and ‘reverse charge’:-
1. " You need to include any services from abroad that the reverse charge applies to, but don't include the value of the services in your flat rate turnover calculations."
2. "Don't include: services you've purchased from outside the UK that you've had to reverse charge"
3. Notice 733 section 6.4: " purchases services from outside the UK to which the reverse charge applies
you do not make any adjustment to your flat rate turnover for these supplies."
4. But then ...... Flat Rate scheme guidance notes on: How to complete your VAT return box-by-box it states:-
"You need to include any services from abroad that the reverse charge applies to, but don't include the value of the services in your flate rate turnover calculations."
5. Then ....... Notice 735 VAT reverse charge for mobile phones and computer chips section 12.1 Flat Rate Scheme states:
6. "Supplies to which the reverse charge applies are excluded from the Flat Rate Scheme. Any such supplies received and made should be accounted for under the reverse charge provisions."
The last statement seems to imply that 'reverse charge' is excluded from the FRS but you have to pay the VAT under the 'reverse charge provisions'
Qu1 - What does the following part statement mean "Any such supplies received and made should be accounted for under the reverse charge provisions."
I suppose my main question is: Do you have to account/pay for VAT at standard rate on the Google Adword invoice if UK company registered in the FRS?
If not I find this confusing because if Google Adwords was in the UK then they would charge VAT on the invoice and this could not be claimed back by the company registered in the FRS
Hope someone can help
Regards - SteveB