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TaxRobin, Tax Consultant
Category: Tax
Satisfied Customers: 17155
Experience:  International tax
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We are an agency supplying contract and permanent staff to

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We are an agency supplying contract and permanent staff to other firms in the UK. One of our contractors has his own company which is registered in America and sends us invoices from this company in sterling. No VAT is applied to these invoices; turnover would be over the minimum vat threshold. Payment is made in sterling to a UK bank account. The work is carried out in America for our client, which is based in the UK. My questions are: 1. Should we conclude these details in the new Intermediary Report now required by HMRC? Should the invoices from our contractor's company include VAT?
Hello and thank you for allowing me to assist you.
The general rules are as follows:
You must send a report to HMRC if at any time in a reporting period you:
are an agency
have a contract with a client
provide more than one worker’s services to a client because of your contract with that client
provide the worker’s services in the UK - or if the services are provided overseas, that the person is resident in the UK
make one or more payments for the services (including payments to third parties)
I would interpret yes, provide the information. As the workers are performing in the US, withholding (PAYE) would be performed there under sourcing rules for US tax on services performed in the US.
Under VAT, when services are supplied to a business, the place where the customer belongs is used for VAT. Their business establishment is in the UK and they have fixed establishments in other countries, but the UK office is the one mainly concerned.
If this were a Non business customer for your intermediary services then that would be different.
Customer: replied 2 years ago.

Many thanks. Can you clarify the VAT point?

Our contractor and his company are based in America.

The work he does is carried out in America.

Our client is in London.

No, they would not from the US have VAT requirement. Sorry for confusion on that.
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