VAT on electronic services - Verify place of use?


N

Nick H

My business will soon supply electronic services worldwide. I think I
understand the implications of this with regard to VAT. I'm unsure
though what 'proof' I need for where the goods are 'used and enjoyed'.

I can find out where the customer 'belongs' from their address. That's
fine. However, is it sufficient just to ask where the services and 'used
and enjoyed' and take that in good faith?

As far as I understand, a UK business could buy our service for their US
branch and would not be liable for VAT. I don't see any way of 'proving'
this, other than asking them directly.

Would appreciate any advice,

Nick H
 
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C

Chris Blunt

My business will soon supply electronic services worldwide. I think I
understand the implications of this with regard to VAT. I'm unsure
though what 'proof' I need for where the goods are 'used and enjoyed'.

I can find out where the customer 'belongs' from their address. That's
fine. However, is it sufficient just to ask where the services and 'used
and enjoyed' and take that in good faith?

As far as I understand, a UK business could buy our service for their US
branch and would not be liable for VAT. I don't see any way of 'proving'
this, other than asking them directly.

Would appreciate any advice,
I wish more companies would make the same effort as you are to
determine whether to charge VAT. I live outside the EU for most of the
year and often end up having to pay VAT on electronic services I order
online simply because my credit card billing address is in the UK.

Chris
 
N

Nick H

I wish more companies would make the same effort as you are to
determine whether to charge VAT. I live outside the EU for most of the
year and often end up having to pay VAT on electronic services I order
online simply because my credit card billing address is in the UK.
Having spent a morning wading through the rules and regulations I can
see why most do .. it's easier and safer to just go on the customers
billing address.

In my personal opinion, this stuff is crazy. What happens if someone,
maybe like yourself, spends their time 50% outside the EU and 50% in the
uk? Do we ask for an email whenever they fly for our billing software? A
copy of their flight tickets? VAT just doesn't work for browser based,
monthly billed services.

But .. I'll press on with this "Used and Enjoyed" condition until I get
a clear answer. I've sent an email to my tax office asking how much
proof I need of that. I fully expect a vague and useless answer :)

It a shame that despite being behind the US technology wise, the UK wont
let you compete on the same level as a US company, and we have to burden
our customers with this rubbish.

Rant over .. :)

N
 
T

Tim

But .. I'll press on with this "Used and Enjoyed"
condition until I get a clear answer. I've sent an email
to my tax office asking how much proof I need of
that. I fully expect a vague and useless answer :)
Let us know what they say!
 
A

Adam

Well, I wish you luck finding out. I've had fun when I've supplied
services to a multinational client and have dealt mainly with an office
in the UK but sent the invoice to an office outside the UK. I phoned
the VAT helpline on this one, who told me that they were not allowed to
issue advice about a specific case, which I thought sounded a bit odd.
Instead, they directed me to a guidance leaflet. The advice in this was
rather vague, and suggested that if you still weren't sure, you should
phone the VAT helpline. Not very useful advice if the VAT helpline
won't offer an opinion.

Seems to me that this is a bit of a grey area. If this is going to crop
up often, I'd suggest finding a good accountant who specialises in
tricky VAT issues.

Good luck!
Adam
 
J

Jonathan Bryce

Nick said:
My business will soon supply electronic services worldwide. I think I
understand the implications of this with regard to VAT. I'm unsure
though what 'proof' I need for where the goods are 'used and enjoyed'.

I can find out where the customer 'belongs' from their address. That's
fine. However, is it sufficient just to ask where the services and 'used
and enjoyed' and take that in good faith?

As far as I understand, a UK business could buy our service for their US
branch and would not be liable for VAT. I don't see any way of 'proving'
this, other than asking them directly.
The rules for doing this are explained here

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageImport_ShowContent&id=HMCE_CL_000914&propertyType=document
 
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