Reverse Charge/VAT

[EML]

Hi,

I am a small computer related U.S. based business that might have a
potential client in the UK. The issue of VAT and Reverse Charge has
come up and I'm not sure what is required on my behalf. I know the
potential client is responsible for the VAT no matter what.

The IRS here seems to have little information about this and the
information they have is more geared towards if one travels to Europe
and buys items and the like.

It seems to me that the reverse charge is used when a EU country does
business with a non-EU country, so the non-EU country does not get
involved with the VAT. Is that correct?

As a business, is there anything that I have to do in regards to this?
Also, the work is web-design related which I'm wondering is even a
VAT-taxed item?

Thanks for any help!
--

 

[Peter Saxton]

Hi,

I am a small computer related U.S. based business that might have a
potential client in the UK. The issue of VAT and Reverse Charge has
come up and I'm not sure what is required on my behalf. I know the
potential client is responsible for the VAT no matter what.

The IRS here seems to have little information about this and the
information they have is more geared towards if one travels to Europe
and buys items and the like.

It seems to me that the reverse charge is used when a EU country does
business with a non-EU country, so the non-EU country does not get
involved with the VAT. Is that correct?

It's within EC.

As a business, is there anything that I have to do in regards to this?
Also, the work is web-design related which I'm wondering is even a
VAT-taxed item?

Web design services are VATable but not subject to reverse charge.

This link is a bit out of date but it gives the idea.

http://www.bytestart.co.uk/content/taxlegal/9_6/vat-reverse-charge-electronics.shtml

 

[Nogood Boyo]

Correct. If your client belongs or is VAT-registered in the UK and
receives services of certain kinds from an overseas supplier, whether EU
or not, he'll have to consider whether reverse charge applies.

See HM Revenue & Customs Notice 741, Place of Supply of Services:
http://tinyurl.com/2cbe36
When they say "you" they mean the UK trader.

It's within EC.

It's not an EC thing - it affects dealings both with EC States and third
countries.
Not as far as UK VAT authorities are concerned.

Web design services are VATable but not subject to reverse charge.

I don't think that's right. Not an easy subject but... If you read
these paragraphs of Notice 741 in the order given, I think you might
come to the conclusion that web design services *are* of a kind covered
by the reverse charge:

Paras
15; 15.1; 15.11; 12; 12.1; 12.4; 12.4.1; 12.4.2; 12.4.8.

If you do come to that conclusion, para 15.2 et seq explain what needs
to be done.

This link is a bit out of date but it gives the idea.

http://www.bytestart.co.uk/content/taxlegal/9_6/vat-reverse-charge-elect
ronics.shtml

That link - "VAT Reverse Charge on electronic goods to combat Carousel
fraud" - deals with a measure introduced on 1/12/06 to deal with
fraudulent supplies of "goods" and is not relevant to the question asked
here.