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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4996
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Uk registered business but it is based in France, it is not

Resolved Question:

Uk registered business but it is based in France, it is not incurring any income - only costs. we are now looking at registering the business for VAT. I say to register in the UK while the director is thinking registering in France to save on paying tax. Can you please advise? thank you Yarka
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Please clarify for me- What tax are you talking of?- would you conduct business from an address in UK?- what costs are being incurred? Many thanks
Customer: replied 2 years ago.

VAT tax

- the office is based in the UK, supplier payments are made from Uk bank ...

- the company is a boat that is registered as a limited company in the UK so the costs are based on maintenance, captain, docking fees, insurance ...

Expert:  taxadvisor.uk replied 2 years ago.

Yarka, thank you for your reply and for additional information.

You would register the business for VAT in the UK if your taxable supplies to UK based customers exceed the threshold for VAT (currently £82,000) and you operate from a UK based business address.

Certain costs would be exempt from VAT e.g. wages, insurances.

If your business is based in France then you ought to consider registering the business for VAT in that country. Under EU rules, invoices raised to customers who are VAT registered and based in EU member state are regarded as zero-rated for VAT purposes so there should be no VAT to be paid for supply of services and goods.

I don't understand the point about "I say to register in the UK while the director is thinking registering in France to save on paying tax." If a business is registered for VAT purposes, then all VAT paid on suppliers invoices would be claimable as VAT input.

Saving on paying tax ...what tax???

More information on VAT Registration can be found here

https://www.gov.uk/vat-registration/calculate-turnover

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 2 years ago.

Hi

We are considering registering for French VAT which I am here to figure out which one to register for...

This business is NOT generating any income so there is not turnover - only costs and the registration would be voluntary

Dilema - is this right?: if the business is registered for UK VAT we could go back 4 years and claim the VAT we paid so far (i am aware this would need to be done before the actual registration), and going forward we could contact all our supplier to zero rate any future invoices which will be in line with the EU law... am i right to think that?

No - Why would we need to register for French VAT and what are the VAT implications? Would we need to pay French VAT?

Again the business/boat is based in France but it is operated and managed from the UK.

Kind regards

Expert:  taxadvisor.uk replied 2 years ago.
Yarka, thanks for your reply.

To be honest, in my opinion you would struggle to satisfy VAT authorities in the UK that the business should be registered for VAT when it is not generating any income and not likely to generate turnover.

If you were successful in voluntary registration, you are right that you can claim back VAT input on business expenses/cost.. time limits are
- 4 years for goods that are still in stock or have been used as cost of sales .. this won't apply to you as you are thinking of maintenance costs etc
- 6 months for services .. most likely applicable to you.

You are right that if you were VAT registered, then your VAT registered supplier within EU member state would raise invoice with zero-rated VAT.

Whether you register in France or UK, VAT is payable on sales/outputs and you claim VAT paid to suppliers for goods/services against it.

I am failing to get to grips with your business wishing to register for VAT when there is no turnover/income from the business. I know of no business that has no income/turnover but just expenses on an on going basis.

I hope this is helpful and answers your question.
Customer: replied 2 years ago.

ok that is helpful - the reason the boat is registered as a limited company is that the liability is diverted from the owner.

How about registering for French VAT? Would the business benefit from registering there? thank you

Expert:  taxadvisor.uk replied 2 years ago.
Yarka, thank you for your reply.

I am not an expert on French tax matters but would be surprised if the French authorities don't have similar concerns.

Basic priniciple is you register for VAT to reclaim VAT spend on business expenses and costs. If the business is not generating any income and unlikely to do so then it is not a business.

I hope this is helpful.
Customer: replied 2 years ago.

thanks - would you be able to recommend anyone who could help me to find out more about the French VAT?

thank you

Expert:  taxadvisor.uk replied 2 years ago.
Yarka, thank you for your reply.

I am not allowed to recommend.
I suggest you make contact with accountants/tax advisors in France to ascertain VAT rules in that country.

An international firm in the UK may be expensive for advice.

If you are happy and there are no more issues I will appreciate if you would kindly rate/accept the service I provided to ensure I get credited for it.

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