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bigduckontax
bigduckontax, Accountant
Category: Tax
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Experience:  FCCA FCMA CGMA ACIS
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I am a uk company not registered as my turnover is below

Customer Question

I am a uk company not registered for vat as my turnover is below 83k...
I have started to introduce clients to estate agents in spain for which I charge a fee... They are asking for my GB vat number and say they can't deal with me unless I have one. Do I need to have a vat number to trade with spain although I don't meet the requirement in the UK
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

ADVOCO has the following advice:

'Another client is self-employed in the UK but has Spanish business customers. In the past she has not charged VAT because her business is below the VAT registration threshold in Britain. She was surprised this year when the Spanish business customers demanded her UK VAT number and of course she was unable to give it to them. They want the number so they can account for the VAT on her invoices using the reverse charge procedure. In Spain this is only possible if they have the VAT number of the service provider. The client is now faced with the choice of either registering for IVA in Spain or VAT in the UK.'

Your company has two options, either to stop trading with Spain or register for VAT. With your services you will be effectively exporting to Span and your supplies, although standard rated, will effectively be zero rated. For every sale you make you quote your own and the customer's IVA [VAT] number on the invoice. The reverse charge will then be effected. When you post the invoice to your accounts you will debit Bank/Cash and Credit Sales and VAT output. At the same time you will Debit VAT input with the tax. You will reclaim the input tax as normal on your quarterly return and pay the output ditto. You will also have to complete EU Sales Lists at intervals as directed by HMRC. Don't blame me, I didn't invent this crazy system. There is a third option, to register in Spain for IVA.

Looking ahead, if the UK leaves the EU these will merely be exports and zero rated and no need to invoke the reverse charge. Under current rules which aggregate all zero, reduced and standard rated supplies to calculate the turnover threshold you will have to watch this area carefully.

I do hope that you have found my reply of assistance.

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