UK Applying mark ups to vatable services from abroad

[Sidney]

Hello,

I'll just start this question by stating for the record that I am no VAT expert but am working on the basis that there is no such thing as a stupid question!

My company purchases services from abroad, both EU and non EU.

In some circumstances we would choose to apply a mark up to the services we then sell on at a profit to our clients but what I am not sure about is how we deal with the VAT in the process.

For instance, if I purchase services from our supplier in South Africa for, say, USD 1000, they will add 14% South African VAT to this, so the invoice I receive will be USD 1140. As both myself and my client are based in the UK and UK VAT, neither of our companies can claim back the VAT, but as I am billing on my UK client I should have to add UK VAT. So in this scenario, if I am marking up by 5%, does that mean I should charge:

USD 1140 * 1.05 = USD 1197 + 20%

Also I assume that for EU services my company can reclaim the EU VAT and therefore it is only the UK VAT that my client will have to pay.

Any thoughts greatly appreciated, I can't stand anything to do with Tax!

Thanks

S