VAT between the UK and the USA


American flagThe United States of America is an important trading partner and export market for the UK, but its federal system of taxation and lack of a comparable system of VAT to the UK can cause confusion for business carried out between the 2 countries. Do you need to charge VAT when selling to the States? This post outlines the main issues as they apply to a small UK business.

The UK comprises England, Wales, Scotland, Northern Ireland, and (generally for VAT purposes) the Isle of Man but not the Channel Islands.

Exporting goods to the USA

Most goods exported to the States can be zero-rated for UK VAT purposes (that is, VAT does not need to be added), as long as documentary evidence of the export is kept. Any extra charges made for freight, shipping, postage or delivery are also zero-rated.

Even where VAT is not being charged, the net value of the sale must still be reported on the UK VAT return, in box 6. It should not be included on the EC Sales List, nor on an Intrastat return if the business is required to make one.

If the UK business accounts for VAT on the Flat Rate Scheme, it must include the value of the export in the turnover on which the Flat Rate VAT is paid. This may mean that the business is better off not being on the Flat Rate Scheme.

Importing goods from the USA

There is no requirement for a VAT-registered business to account for VAT on imports into the UK from the USA in the same way as from other EC states.

The United States has a system of sales tax that is charged at the state level rather than at the federal level. Most states choose to charge it, and the rate varies considerably, from 1% to 16%. However, this should not be added on goods that are exported from the USA into the UK. Instead, UK VAT at 20% is normally paid on import, and a UK VAT-registered business can reclaim that same amount from HMRC by including it as input VAT in box 4 of their regular VAT return, subject to the normal rules about recovering input tax.

VAT on services

UK VAT may need to be charged on services performed in the USA or to clients based there, depending on the type of service supplied. This is a complex area, and there are specific rules for the following services:

  • Services relating to land or property
  • Services of short-term hire of means of transport
  • Services involving physical performance and events. For example artistic, cultural, education and training, sporting, entertainment services, exhibitions, conferences, meetings
  • Supplies of admission to artistic, cultural, education and training, sporting, entertainment events, exhibitions, conferences and meetings and services related to admissions
  • Ancillary transport, valuation of/work on goods
  • Restaurant and catering services
  • Passenger transport
  • Freight transport
  • Intermediary services (generally agencies or brokers working for a commission)
  • Training services supplied to overseas governments


Everything else is covered by a general rule. This includes copyright, royalties, licences, other intellectual rights, advertising, consultants, engineers, lawyers, accountants, data processing, written translation, computer programming, software maintenance, web design, sound engineers and technicians, the supply of staff, banking and insurance.

Under the general rule, if the service is being supplied to a consumer (rather than a business) in the USA, it will be subject to UK VAT. This means that UK VAT must be charged at the usual UK rate, either standard rate, reduced rate, zero-rated or exempt. The UK business will account for VAT in the usual way.

If the service under the general rule is being supplied to a business customer in the USA, it will be outside the scope of UK VAT (UK VAT is not charged). Some evidence of the business purpose should be obtained.

If the UK business accounts for VAT on the Flat Rate Scheme, it does not need to pay Flat Rate VAT on the value of services which are not subject to UK VAT due to them being performed in the USA or to a customer based there.

Services relating to land or property include estate agency, conveyancing, architects, surveying, construction, property maintenance and repair work, hotel accommodation (unless a tour operator), defined exhibition stands, and property management services. If the property is in the UK, the service is liable to UK VAT regardless of the status or location of the customer. If the property is in the USA, the service is outside the scope of UK VAT regardless of the status or location of the customer.

In all cases, it is important to look at the precise nature of the underlying service being provided. A business cannot turn one type of service into another by simply changing the wording on the invoice.

Additional services rules

The UK business is still able to reclaim any UK VAT on expenses which it incurs in providing a service which is deemed to be outside the UK, providing that the service would be taxable if it was made in the UK, and subject to the normal rules about reclaiming input VAT.

If a VAT-registered UK business receives a service from an American supplier, and the place of the service according to the above rules is in the UK, the UK business may need to ‘reverse charge’ that service (see section 16, VAT Notice 741). If the UK business is not registered for VAT, and the service is ‘intangible’ or ‘intellectual’, the value of that service will be included in the turnover of that business in determining whether it needs to register for UK VAT.

Please note that we are no longer taking on any new overseas clients or UK clients with significant overseas interests, and we do not give free advice by email or telephone.




68 Comments (oldest first)

  1. Roger

    We are a construction company and we have been asked to do some building work in America. The company we will be working for and invoicing is in the UK but the work will be in America. Do we charge UK VAT?

    1 November 2014

  2. Admin

    If the land or property is in America, your service is outside the scope of UK VAT. It is not charged.

    2 November 2014

  3. M J Horn

    A USA firm wish our UK firm to make changes to our digital product/service in order to incorporate our product into their portal - they are paying for those changes (and we are outsourcing to a UK digital development agency) - would our invoice to the USA company covering those costs be zero-rated VAT?

    We understand we’ll pay VAT to the UK supplier on their services but do we charge the USA firm VAT on their payment to us received to cover the outsourced work?

    12 November 2014

  4. Admin

    With VAT on services with an overseas aspect, it is important to identify the nature of the service being supplied. I’m not completely clear about your business model (what is your “digital product/service”?), but this supply looks like some sort of IT or web development service. In this case, with your customer belonging in the USA, the supply is outside the scope of UK VAT, so there is no need to charge it.

    12 November 2014

  5. S. Tenorio

    If a US company hires a UK-based development company to build a website and all work is conducted in the UK, but payment comes from the US, does the UK service provider need to charge VAT?
    thanks

    20 November 2014

  6. Admin

    It is not so much where the payment comes from, but where the client belongs.

    If the client has an office in the USA and nowhere else, there is no need to charge VAT.

    If the client has its head office in the USA, and a branch office in the UK, you need to decide which one is the most direct user of the service. This should reflect commercial reality, and may be different from the contractual position. In the case of web development, this will usually be the office of the client which provides the editorial and artistic direction. If this office is in the USA, there is no need to charge VAT. If this office is in the UK, you probably do need to charge VAT.

    20 November 2014

  7. LT

    We have a UK based company that is arranging for computer software and hardware to be installed in the US for a Canadian company.

    They have invoiced the Canadian company, and have not included VAT under the B2B rules.

    The US company that they have subcontracted to carry out the work has charged Federal Sales Tax on the invoices they have raised against the UK company for the services they are supplying in the US.

    Can the UK company reclaim this ‘Sales Tax’ in the UK as input tax?!

    20 November 2014

  8. Admin

    “Can the UK company reclaim this ‘Sales Tax’ in the UK as input tax?!”

    No, definitely not.

    20 November 2014

  9. Steve

    I advertise a rental property which is in Florida on a US website and have done so for about 8 years. This year at renewal they’ve begun charging 20% VAT because the country where I’m normally resident is the UK. I pay in US Dollars. Are they right to do this?

    20 November 2014

  10. Admin

    Why do you say it is a “US website”? The fact that its domain ends in “.com”? The fact that it advertises US properties? The fact that you pay in US dollars?

    What is the entity that is charging you? Do they have a UK address? Do they have a UK VAT number?

    Edit 03/01/15: “Steve” never came back with more information. VAT on transactions with an overseas aspect is obviously a complicated area, which is highly dependent on the exact details of your individual situation. If that were not the case, then everyone would either already know the answer, or find it for themselves in under 2 minutes on Google. Therefore, don’t be surprised if I need to ask for more details than the bare bones which you provided.

    21 November 2014

  11. LT

    Referring to points 7&8, is there any way for them to reclaim this tax then?

    Would they claim it as foreign tax paid on their CT?

    I am struggling to understand why they would lose 7% of their revenues by way of tax in the US, and have no way of reclaiming it?

    21 November 2014

  12. Admin

    “Referring to points 7&8, is there any way for them to reclaim this tax then?”

    Without knowing the full details of your situation, or the ins and outs of US Federal Sales Tax (not really what this page is about), I think it is unlikely you will be able to reclaim this, at least from the UK government.

    “Would they claim it as foreign tax paid on their CT?”

    No. That is for US tax deducted from income arising there.

    One option is to go back to the US supplier who did the work, and ask them if there is a provision in US tax law whereby they do not need to charge Federal Sales Tax to an overseas customer. Given that they are a US company, and the equipment and service was supplied on US soil, I think this is unlikely.

    21 November 2014

  13. Mark Mullin

    I am a sole proprietor in the US. I am sending an invoice for web site design to a client in the UK. Do I need to charge VAT? They are asking me to include a declaration that I am responsible for VAT.

    21 November 2014

  14. Admin

    Assuming that your client in the UK is a business (rather than a consumer), this is a service which is subject to VAT where the customer belongs. There is no need for you to register for VAT in the UK as a Non-Established Taxable Person, or to charge VAT. Your client has to account for the VAT under the reverse charge mechanism, and they cannot avoid that responsibility by you making a declaration.

    21 November 2014

  15. Sarah

    I recently made my first export from the US to the UK, not realizing VAT would be charged and not invoicing the UK client (a business) for the VAT. Our carrier (UPS) paid the VAT and charged it back to us. Not fully understanding the VAT rules, I’m wondering now if there is a way to recover it (is it uncommon to send a follow-up invoice to the client?)

    21 November 2014

  16. Admin

    Different carriers have different procedures, but the basic idea is that UPS should issue a certificate (it might be called a form C79) for the VAT they have paid, which the UK company can use to reclaim the VAT (subject to the usual rules about reclaiming input VAT).

    22 November 2014

  17. Claire

    I am based in the UK and I am invoicing a company in the US as they are sponsoring one of our seminars, which is to be held in London, do I charge VAT?

    3 December 2014

  18. Admin

    It depends on exactly what you mean by “sponsoring”.

    If your charge is for the right to have an active presence (perhaps setting up a stand) at an event in the UK, it is subject to UK VAT, wherever your customer is based.

    General advertising charges to a US company are not subject to UK VAT, even if the advertising space is physically in the UK.

    Generally for seminars, exhibitions, conferences and similar events:

    If your charge is for admission to events, it is subject to UK VAT, wherever your customer is based.

    If your charge is for organising an event in the UK on behalf of a US company, it is not subject to UK VAT.

    4 December 2014

  19. John

    I’m selling a web-based business to an American company, including the website and all IP. I’m UK based. Is any VAT due on the sale?

    6 December 2014

  20. Admin

    It might qualify as a TOGC (Transfer of a business as a Going Concern), in which case no VAT is charged.

    Otherwise, it depends on the breakdown of what is being sold. If it included stock which was not being immediately exported as part of the sale, then VAT would be charged on that part.

    Selling a business is a complicated matter. If the sale price is over say £10,000, you should get proper professional advice.

    8 December 2014

  21. Opie

    I want to purchase a jacket from the UK shipped to the US do they charge me VAT

    10 December 2014

  22. Opie

    The jacket I want to purchase is only available from Lynx brp eu. The price is around $360 US I just wanted to make sure I do not get ripped off on VAT and shipping costs

    10 December 2014

  23. Admin

    You should not be charged VAT on that, if the supplier knows what they are doing.

    10 December 2014

  24. Martin Smith

    Hi guys,

    I run a UK Company (currently not VAT registered).

    I understand that VAT isn’t charged on product sales within the US, provided the product has been ‘exported’ to the USA.

    What if our company (or a company we pay) manufactures our product in the USA and we sell it direct to USA customers?

    Thanks,
    Martin

    10 December 2014

  25. Admin

    That would be completely outside the scope of UK VAT.

    11 December 2014

  26. susan

    Hi
    I am a UK citizen who lives in the USA. We are about to instruct a firm of solicitors and estate agents in the UK to sell our property in the UK, and do the legal work. The bills for these services will be paid by the company based in the USA. Will the solicitors and estate agents charge VAT on their invoices?

    18 December 2014

  27. Admin

    Yes, because these are services relating to land and property in the UK.

    18 December 2014

  28. Sacha

    Hi, what if the company is a digital service provider registered in the US? Does US sales tax apply or does the new EU digital service tax apply for this US company to charge for their UK client, above their service cost?

    19 December 2014

  29. Admin

    US providers of digital services to UK consumers should have been charging VAT based on the country of their customer since 2003. The only change in January 2015 is reporting through MOSS instead of the VoES portal.

    19 December 2014

  30. Donna Knox

    Hi! I run a crochet pattern business out of the US. I supply digital copies of my patterns to the UK and to EU Countries frequently via etsy, craftsy and ravelry, who do not account for VAT charges. If I am a US business, making less than 81k pounds and not registered for VAT, must I collect, remit and report VAT? If I offer some amount of personalized connection rather than click it, buy it, (like click it and I email you the pattern) am I liable for VAT? If I host the pattern sales on my own website, is that enough personalized touch to be not eligible for VAT? Thank you for your answer on this! A lot of us in the pattern world are very nervous about this and some are questioning the validity of a law imposed on American citizens from another country. Am I right to assume that this is a trade/import/export issue? That this is a legitimate tax we should be collecting, and that failure to do so could result in an audit? If so, would they audit through the US IRS system or through the UK equivalent? I’m sorry for so many questions, but there are a lot of them out there right now!

    29 December 2014

  31. Admin

    The first part of your post is about whether you are selling an “electronically supplied service”, and are therefore liable to charge UK VAT. This is defined as a digital service where there is “minimal or no human intervention”. The key question is therefore the extent to which your sales process is automated.

    As is often the case, you are probably not going to find a definitive ruling that exactly matches your individual circumstances. There are various opinions available, with varying degrees of authority.

    • Everyone agrees that a system that automatically and electronically dispatches a document once an online order is received, is an “electronically supplied service”.
    • There are differing opinions on whether a manually compiled email, where the only human intervention is attaching a file, qualifies.
    • If the email also includes some degree of human personalisation – perhaps some advice specific to the customer’s situation – it is probably not an “electronically supplied service”.

    You might find Annex A, at the bottom of this page, helpful: http://www.mynewsdesk.com/uk/hm-revenue-customs-hmrc/blog_posts/eu-vat-changes-twitter-q-a-31555

    It looks a lot like splitting hairs, but you have to draw a line somewhere.

    There is also the issue that different EU states might draw the line in a slightly different place.

    If I host the pattern sales on my own website, is that enough personalized touch to be not eligible for VAT?

    I don’t think that hosting the sales on your own website makes any difference if the human intervention is still minimal, but it would probably give you more scope to introduce more human intervention.

    “A lot of us in the pattern world are very nervous about this and some are questioning the validity of a law imposed on American citizens from another country.”

    You are always going to get a wide variety of opinions, especially when people have a financial preference for a particular answer, and on the internet where people are mostly anonymous.

    It is probably more sensible to view it as a law imposed on sales to UK residents, rather than a law imposed on American citizens per se. You do have the option of not selling to the UK, if you do not like the law.

    “Am I right to assume that this is a trade/import/export issue? That this is a legitimate tax we should be collecting, and that failure to do so could result in an audit?”

    A question about legal jurisdictions is one for a lawyer rather than an accountant. I highly doubt that the governments of the UK, France, Germany et al would have enacted legislation that they knew they did not have the power to enforce.

    “If so, would they audit through the US IRS system or through the UK equivalent”

    Through the UK equivalent: HMRC. They claim that they do identify overseas business that should be paying VAT, and that they enforce payment.

    30 December 2014

  32. Sue

    Referring to point 9 I have, today, found myself in the same position. I probably use the same company to advertise my single rental property in Florida and, if so, the company is based in Austin, Texas and is quoted on NASDAQ. The company may well have an office in the UK but the HQ and the support team are indisputably in the US. I also pay in US dollars, admittedly using a UK credit card, but could equally as well pay using a US debit card with a US billing address. So my question is the same - is the US company right to levy VAT? I cannot find any information relating to this EU tax change.

    2 January 2015

  33. Admin

    This has nothing to do with the EU VAT change on 1 January 2015, as your supplier is American.

    It is probable that either:

    1. Your supplier does not realise that if their supply is for business purposes, they do not need to charge UK VAT; or
    2. You have not confirmed your business status to them.

    3 January 2015

  34. Sue

    Thank you for your prompt response to 32. I have 2 follow up points:

    1. The US company has stated “In order to comply with EU taxing requirements, we started charging VAT on January 7th, 2014″.

    2. The property was bought as a holiday home with rental potential and although it is subject to state and county business licenses in the US it is not formally registered as a business in the UK.

    Do these make any difference to your response?

    3 January 2015

  35. Admin

    1. I am not aware of the significance of 7 January 2014, and “EU taxing requirements” is too general to be much help.

    2. This should not make any difference.

    It sounds a little like your supplier is not interested in establishing your business status to their satisfaction. Perhaps their IT systems are not set up for that. Other overseas advertisers - Google, for example - do have the option of registering your business status, and once you have done so, they will not charge you VAT.

    Ultimately they are of course at liberty to quote you whatever amount they like, without specifying how much of it is VAT. You are then at liberty of accepting or declining their offer. Such an approach on their part would be self-defeating, however. If their costs are 20% higher due to charging VAT, their competitors will scoop up a lot of their business.

    3 January 2015

  36. Sally

    Thank you for the invaluable information available on this page.

    We are a US based software company supplying our own software to many European customers, specifically the UK. The software cannot be downloaded and is not available for sale on our website. If a customer requires our product they must enter into a contract and we will make our product available to them. It cannot be purchased in a shop - anywhere. Our software is installed in large businesses in the UK and is not sold to individuals. If a customer requires support they must contact our office.

    We bill for our services from the USA. We do not have an agent or office in the UK.

    Should we charge VAT and, if not, what if anything must we gather as evidence to demonstrate we are not within the scope of UK / EU VAT?

    Thank you!

    5 January 2015

  37. Admin

    You appear to be selling a digital product (rather than a physical product), with human intervention which is more than minimal. You belong in the USA, and you are selling to businesses in the UK. On this basis, you do not need to charge UK VAT.

    To support this position, you should obtain commercial evidence showing that your customer does not receive your supply for a wholly private purpose.

    For some supplies of services it will be clear that the supply would not be purchased by anyone for a wholly private purpose.

    VAT registration numbers are the best evidence that the supply is not received for a wholly private purpose and should be requested. If your customer is unable to provide a VAT number, you can accept alternative evidence.

    If your customers are all large businesses in the UK, their business status is unlikely to be questioned or contested.

    5 January 2015

  38. Colin Hoy

    We are a recruitment company & have placed an individual with a USA manufacturer for a UK national account manager - they are UK based and will work in the UK.
    Our client has asked us to charge VAT and to send the invoice to the USA - even though they have a UK office.
    Does this seem correct ?
    Colin Hoy

    5 January 2015

  39. Admin

    Is the office in the UK that of a branch, or a subsidiary?

    Regardless of where they have asked for the invoice to be sent, what is the legal entity that it is made out to?

    5 January 2015

  40. Sally

    Thank you very much indeed for your kind response to my question at #36. I very much appreciate it. Good luck to you.

    5 January 2015

  41. Carol

    Following up on the question from Sally 36.. If we were the UK based customer in this case would we then have to add VAT to our invoice and them claim back on our VAT return?

    3 February 2015

  42. Admin

    You would “reverse charge” it, if that is what you mean.

    3 February 2015

  43. Liz

    We have a client with a US company that requires a computer to be delivered here in the UK. The US company will be paying the bill - do we have to charge VAT?

    4 February 2015

  44. Admin

    Assuming that you are a UK-based supplier of computer equipment, then you would charge VAT, because the equipment is not leaving the UK.

    4 February 2015

  45. Nick

    Hi
    I have recently purchased from America some new rear led lights for my car, I have had to pay the following charges: import duty £9.01, import VAT £61.91. I contacted the company in America that I purchased from about these charges they said that the UK had charged VAT when shipments from the US should be VAT free, can you confirm if this is correct?

    10 February 2015

  46. Admin

    UK VAT is correctly charged on imports of goods into the UK from outside the EU.

    11 February 2015

  47. Nick

    I recently ordered a Video Game from the UK, I live in the US, I have never seen this charge before. Should I have been charged for this purchase?

    13 February 2015

  48. Admin

    Assuming “this charge” means UK VAT, then, No.

    13 February 2015

  49. Sara

    I am a US based company buying advertising in a UK based magazine. From what I read above I should not pay VAT tax. Is this correct? Thanks for any clarifications.

    17 February 2015

  50. Admin

    Correct.

    17 February 2015

  51. John

    Several US companies my company buys services and products from charge VAT. They usually remove the VAT charge when I quote my company’s VAT number (as proof I am a business). However in some cases they do not.

    They always quote their VAT number in the form EU xxxxxxxxx. This seems to be a common practice.

    When I contact HMRC to request how I can reclaim VAT when it has been charged they say I cannot. They also say they know nothing about the “EU xxxxx” VAT number and that it is not legitimate.

    Please advise.

    18 February 2015

  52. Admin

    A VAT number in the form EU xxxxxxxxx belongs to a non-EU supplier, for their use when supplying digital services to an EU customer. The EU prefix is used when they have registered in one EU state, through which to account for VAT on their sales to all the others (the VoES and MOSS portals).

    18 February 2015

  53. Mitch

    I am a US business and have signed up for a business conference that will take place in London. Do I have to pay the 20% VAT they have added to my invoice for this event?

    20 February 2015

  54. Admin

    Yes, but you can probably reclaim it. See section 5 of VAT Notice 723A.

    20 February 2015

  55. Cat

    I’m a UK based designer - sole trader. Not registered for VAT.

    I have clients in the US. So far they have paid me via Paypal into my UK account and I have not charged any VAT either end. Is this all above board? Does it only change If I start making a certain amount of money? (81k)?

    I’m paid for my time and then I email the pdf or jpg files to the clients - each are personalised to each specific client - so none of the buy it click it business.

    23 February 2015

  56. Admin

    As a designer, assuming your designing is not land-related, it sounds like your service is covered by Schedule 4A, paragraph 16. This means it is outside the scope of UK VAT, regardless of your level of income.

    I cannot comment on local taxation requirements in the USA, as these vary from state to state.

    23 February 2015

  57. Jackie

    We are a UK VAT registered company who provide relocation, moving services. We have a storage shipment belonging to a USA based business. We have not exported and will not be importing this shipment.
    Do we charge VAT on the storage charges?

    4 March 2015

  58. Admin

    If you have agreed to store goods, without granting a right to a specific part of a warehouse or storage area for the exclusive use of the customer, this will fall within the general place of supply rule. In such cases you do not charge VAT to business customers who belong outside the UK.

    4 March 2015

  59. Nathan

    Similar question as #36 (Sally) - I understand most of that, just need a tiny bit of clarification. We’re migrating (and have the option to rewrite parts of) a website for a UK-based business. This means there are several ways of looking at it- either a product (code base) or a service (creation of one).

    Now - “VAT registration numbers are the best evidence that the supply is not received for a wholly private purpose and should be requested.” How does this help me / what do I do with this? Do I even need to file anything on the UK side?

    Moreover- I can’t find a definition for “Wholly Private Purpose”. In our case, we’re setting up a website (or have the option of moving their existing site) with connection to their DB. A chunk of this can be custom for them, but if it would help with taxes, we can use a boxed solution (open source).

    Where does that leave us? We have several ways of going about it, but would like to avoid the VAT as it would off-set their budget and our costs, putting us at a loss (low margin where every dollar/pound counts.

    Thanks a million for having this up here, as well. Extremely helpful.

    6 March 2015

  60. Admin

    “We’re migrating (and have the option to rewrite parts of) a website for a UK-based business. This means there are several ways of looking at it- either a product (code base) or a service (creation of one).”

    Unless you are supplying standardised software by physical media, this will always be a service, not a product. There is also clearly more than “minimal or no human intervention”, as this is a one-off job.

    “Now - “VAT registration numbers are the best evidence that the supply is not received for a wholly private purpose and should be requested.” How does this help me?”

    It means that the UK company will account for any VAT under the reverse-charge mechanism. You will not have to get involved.

    “what do I do with this?”

    Just keep it on file.

    “Do I even need to file anything on the UK side?”

    No.

    “Moreover- I can’t find a definition for “Wholly Private Purpose”.”

    It seems self-explanatory. Did you have a specific concern?

    “In our case, we’re setting up a website (or have the option of moving their existing site) with connection to their DB. A chunk of this can be custom for them, but if it would help with taxes, we can use a boxed solution (open source).”

    I don’t see how that changes anything. Even if you are using open source software, your involvement appears to be more than minimal. The supply of your service is not completely automated.

    “Where does that leave us?”

    Your UK customer will account for the VAT. Assuming that they can reclaim VAT on their purchases, which they probably can, it should be tax-neutral for them.

    6 March 2015

  61. Sunny

    We are a US based company and we are working with a client in UK who is a chemical/ink manufacturer. We are placing an order with a distributor in UK to deliver goods to our client in UK. Our distributor is charging 20% VAT to us on the invoice as VAT charge because they said delivery address is within UK.

    In this case can we as US company charge back the same to our client when we invoice and if yes do we put that amount in our price and not charge separately as VAT because we don’t have VAT number? Or do we have to charge separately as VAT? Thanks for your help as soon as possible.

    6 March 2015

  62. Admin

    “In this case can we as US company charge back the same to our client when we invoice and if yes do we put that amount in our price and not charge separately as VAT because we don’t have VAT number?”

    You can quote whatever price you like, without specifying how much of it is VAT. However, if that makes you 20% more expensive because your price will include VAT which they cannot recover, they might decide to buy elsewhere.

    It sounds like you need to register for VAT in the UK as a NETP (Non-Established Taxable Person). This would enable you to charge UK VAT to your customer (which they could recover as you have the UK VAT registration number), and recover any VAT which you are being charged. In this way, it becomes tax-neutral.

    6 March 2015

  63. Jones

    I am UK based, as are most of my clients, but I do also supply management consultancy services to a corporation in the USA, whom I invoice in dollars. I am VAT registered in the UK. Should I be charging VAT to the US corporation?

    10 March 2015

  64. Admin

    No, UK VAT is not charged. Management consultancy comes under the “general rule”.

    10 March 2015

  65. GMac

    I work for a firm which sells software and services (software programming) to a UK non-profit. We deliver the software via electronic download. We deliver the services via remote connection to their systems from the US.

    We are not VAT registered in the UK.

    We included VAT in the total cost calculation for the project, but did not invoice for VAT, based on an understanding that our client is responsible for paying the VAT.

    The total project cost, including hardware and software, before VAT, is only GBP 50K.

    Are we correct in telling the client that VAT payment is their responsibility ?

    Thankyou.

    10 March 2015

  66. Admin

    Can you elaborate on your “UK non-profit”? Who are they?

    I probably need to understand more about what you have supplied, since it also appears to include hardware. Is the software bespoke? Is the human intervention more than minimal?

    10 March 2015

  67. David

    We are a US company with no presence in the UK that resells subscriptions to an online SaaS software solution from a UK based supplier then resell to a UK based company. Do we need our own VAT number for this? Reseller has charged us VAT on the transaction and we have in turn charged the customer.

    12 March 2015

  68. Admin

    Assuming your service qualifies as an “electronically supplied service” with “minimal human intervention”, you should not have been charged VAT, and you would not charge VAT as your customer will account for it as a reverse charge.

    Either I have misunderstood your comment, or you have got quite a bit of unravelling to do.

    12 March 2015