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bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4959
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We are a UK VAT registered business trading in the marine electronic

Customer Question

We are a UK VAT registered business trading in the marine electronic field. We have a big job on a Sunseeker 94ft based in Majorca. The boat is registered in the Cayman Islands and is on Temporary Import for VAT purposes at the moment. She will have to leave the EU and go to either Gibraltar or Algeria and then return to comply with the Import VAT rules. We need to know if we have to charge VAT for the equipment supplied and for the labour involved. Our invoice will be sent to the Cayman Islands Company address.
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello, I'm Keith and happy to help you with your question.
Majorca, being part of Spain, is in the EU [see EVI web sire, part of Amazon].
You are supplying goods and services to a non-business customer and thus it is a standard rated supply and you should charge VAT at 20%. I would be inclined to check with your local VAT office for guidance as the rules for 'place of supply' are highly complex and may influence the decision as to the application of VAT. Also, as the company being invoiced is in the Cayman Islands it is possible that the supply counts as an export and thus zero rated.
I personally favour the last option, but would be inclined to check with HMRC as an error could cost your organisation dear.
I do hope that I have pointed you in the right direction.
Customer: replied 3 years ago.

Hi, Thanks I will phone the VAT people and try for a ruling on this. There is £10K of vat involved so we have to get it right.

I think it will be zero rated also. Payment will come from the Cayman Islands via bacs system so we have proof of money route.

Problem with the VAT office is it depends on who you speak to as to what answer you will get!!

Thanks for your answer.


Expert:  bigduckontax replied 3 years ago.
Yes, Jim, you have it to a T! Get the name of the official with whom you deal in case of some future difficulty. Personally I have always found the VAT chappies very knowledgeable and correct in their answers. As we have determined much is at stake here not only for you, but your unfortunate customer were they landed with an extra 10K to pay.
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