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Sam
Sam, Accountant
Category: Tax
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Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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if working offshore abroad, and not charging the uk client

Resolved Question:

if working offshore abroad, and not charging the uk client VAT on an invoice do i still declare earning to HMRC and will i be charged VAT even though i did not charge the client?
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.
Hi
Thanks for your question
1) When did you leave to go abroad
2) Is this work for this client carried out abroad or did you come back to the UK to undertake the work and is this is anyway connected to the offshore work
3) Are you employed or self employed abroad
4) how many visits have you had back to the UK since you started to work offshore
5) How long do you envisage this work abroad lasting for
6) Are you a British Citizen
7) Are you registered for VAT in the UK (and if so whether as a sole trader, partnership or limited company)
Thanks
Sam
I can thena dvise further
Customer: replied 2 years ago.

i am employed by my VAT ltd company.

I am contracted to work for another UK based company.

i work offshore in the oil and gas industry

i went abroad 3 weeks ago

i usually work in the north sea, but my last invoice charged and the next one due was from working abroad

i am a British citizen

i will usually work 2/3 weeks offshore then home for 2/3 weeks

i have been charging VAT on previous invoices, but was informed by the company i have been hired by that i was unable to charge VAT on the two invoices in question as it was work abroad

Expert:  Sam replied 2 years ago.
Hi
Thanks for your response
Then Might I advise that it might be that you should be employed directly by this other UK based company as this could be in breach of the IR35 legislation,which states were it not for your limited company would you in fact be an employee of the third party engager.
And you only have one client - which further supports the position, you do not make a loss, you are paid regardless for the time you provide, and you use their equipment and go to where they ned you, and work their timetable.
However that aside,(but please do consider this as employment legislation is taken very seriously by HMRC) lets say for the moment this is right - so I can give you the answer you actually sought -
Taxes
You, as an individual are not deemed to be non resident for any aspect of the work you do abroad, as you are not living and working out of the UK, as you come home every 2/3 weeks, and stay for 2/3 weeks, so for tax purposes you are UK resident and remain liable to UK tax (as a director/employee of your limited company) and the company (whether this is right or wrong under the IR35 position) is situated in the UK and the work you do for the other UK based company is also UK situated, so Corporation tax is due on all income that comes through the company, regardless of where that is carried out.
However for VAT, as you are providing a physical service abroad then the locations of your or their establishment (registered office) has no bearing - its about where the work is physically undertaken, as this is not within the EU (EC) then VAT is NOT due
Any oil platform in the North Sea is considered "land" so it IS outside of the EU (and in fact outside the scope of any countries VAT jurisdiction!!)
See flowchart here
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/368153/741-diagram1.pdf
So as matters stand they are right -
.
However - if my view on the position is right, and that is, you should not be providing your services under the guise of a limited company, and should in fact be an employee, then VAT would NOT be an issue, as not due. So please take some time to consider this factor.
Let me know if you have any follow up questions on the information I have provided.
Thanks
Sam
Customer: replied 2 years ago.

Thanks for that.

I have provided my services for several companies since setting up my ltd company. I was not employed by the company as it is not classed as regular employment, in that the y may not ask for my services again or it may be several months between contracts.

The company sub contracts the work to me. So if they are also based in the uk( main office in Scotland) what would you suggest i tell them with regards ***** ***** sorry if i am not being very clear. i have been given a lot of conflicting advice from colleagues and my accountant is less than forth coming with advice.

thanks

Expert:  Sam replied 2 years ago.
Hi
Thanks for your response
I appreciate the dilemma - but I am sure you can appreciate that I would not be doing my job properly if I did not highlight the potential problem here with the IR35 position, and whether you have provided your services to several companies, each one needs to be looked at to see if its breaches the IR35 legislation.
I have added a link here for the employment status indicator (its an interactive tool, with yes. no questions or options from a drop down menu, which you can use informally - and not enter your personal details, or formally where you do enter your details) tool, this (in most cases) determines whether the work you are about to take on should be employment or can be self employment (and if it advises self employment than the fact you provide your services through the limited company is fine)
http://www.hmrc.gov.uk/calcs/esi.htm
If this indicates that you should in fact be an employee - then you really do need to take this to this (and any future) companies for whom you will provide work for, and ask for their comments.
In my honest opinion - they like to engage you just how they are at this time, its cheaper for them - less admin and they do not suffer the National Insurance, Sick pay or annual leave pay - what's not to love ! But they are putting you in a difficult position, either take it or leave it, will be their mantra - and I just need to advise you of this so you know what the risk is.
But in your favour - if you should be an employee - there would be NO VAT. If its acceptable that you are providing your services through your limited company - there is NO VAT, so this element you have no further cause to worry over (or have HMRC VAT chase you for VAT not collected) you will not charge them VAT if you remain invoicing them for the work from your limited company -
Do let me know if you have any follow up questions, but it would be appreciated, if, in the meantime you could rate me for the level of service I have provided, as this ensures Just Answer credit me for my time
Thanks
Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13809
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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