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bigduckontax
bigduckontax, Accountant
Category: Tax
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If I'm contracted to a US Company who direct all my work activities,

Customer Question

If I'm contracted to a US Company who direct all my work activities, which wholly and directly support the Company Offices in Italy, France, Germany, Spain, Ireland, and Netherlands and the Company pay my Fee and Expenses - am I liable for VAT?
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, and pleased to be able to help you with your question. If you are self employed as would appear to be the case and your turnover ie your fees exceed or approach 82K in any one year than you would be liable to UK VAT and should register accordingly. If you are below this level then you so not need to worry about the tax. Your expenses do not come into the 82K aggregation, they are outside the scope of the tax. I do hope that I have been able to set your mind at rest on this matter.
Customer: replied 1 year ago.

This is contrary to the advice I was given?

I was given to understand by the Dutch Finance Director and indeed the Irish Finance Director with the US Company that because I was contracted to a Foreign Company outside UK, instructed by them and paid by them outside UK ie Holland I wouldn't have to pay Vat as there is no mechanism for the US to reclaim? On this basis I have not registered for Vat since 2007?

A supplementary question?



  • If I have to pay this - can you tell me what Vat payments am I liable for on total income of £136,000 (2007/8), £109,000 (2008/9), £92,000 (2009/10), £117,000 (2010/11)

Expert:  bigduckontax replied 1 year ago.

I would submit that if you are resident in the UK then the normal VAT rules would apply to you. If you invoice your customers than your supplies to the States would be zero rated, but to those within the EU, unless the Reverse Charge ie you have the VAT or equivalent registration number of the customer system applies, these would be standard rated supplies. A classic example of the system is the taxation of racehorse jockeys whose riding fees are subject to VAT.

VAT rates for 07 - 11 were 17.5% except for 08/09 when it was 15%. Therefore you owe say 20K for 07/08, 14K for 08/09 and the same for 09/10; total some 48K plus penalties for late declaration and interest on unpaid tax. I am so sorry to have to rain on your parade.

Remember that supplies outside the EU are zero rated as indeed some within are effectively so through the Reverse Charge process.

Expert:  bigduckontax replied 1 year ago.
Correction: 10/11 is a further 17K liability bringing the total up to some 65K.
Customer: replied 1 year ago.

I asked a supplementary question and didn't get a reply -

I'm an HR Consultant and invoice the US Company direct - there is no Vat exchange (they are not registered for Vat in this country). If I charged them now would they be able to reclaim the Vat back and how would the do this.

I would be grateful for a response, one that would help me enjoy my holiday in Spain, I leave tonight?

Expert:  bigduckontax replied 1 year ago.
Actually, I did, but I will put it another way. As you are invoicing from the UK to the USA this is a zero rated supply so although it is an export your service is subject to VAT, but the rate of tax is 0%. If you are invoicing from the UK to an organisation within the EU the the supply is standard rated unless your customer has an EU VAT, or equivalent, number in which case the Reverse Charge System applies. Under this system you charge VAT and immediately recover it as an input. Don't blame me, I did not invent this crazy system! If your turnover of standard, reduced rate or zero rated supplies approaches or exceeds 82K in any one year then you must register and account for UK VAT.
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Category: Tax
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Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 1 year ago.
Thank you for your support.
Expert:  bigduckontax replied 1 year ago.
And the most generous bonus too.

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