UK VAT Query - Start up Business

[Aaron Burchett]

Hi there, I am in the process of starting up my own business within the UK and have a query regarding VAT:

My business will sell a photography service to customers travelling to major cities around the world. As the service is bought via our website, we will assign a photographer in the relevant city. The photographers will not be employed by us but work as self-employed.

Once the service has been delivered by the photographers they will invoice us in order to be paid. My question is... we will be able to claim back any VAT for payments made to the photographers? - even if the amount that they will be paid is pre-determined.

Apologies if this is stupid question but my knowledge is limited when it comes to accounting.

Thanks for any help in advance.
Aaron.

 

[Becky]

Welcome to the forum Aaron

I will start off by saying that my knowledge of VAT is limited, and it is a very complex area. There are a few matters which you will need to consider. The first is whether you are required to register for VAT - if your turnover in respect of taxable supplies made exceeds £82,000 then you must register. Below that amount, it is optional (unless your supplies are entirely exempt). Read more here: VAT Registration

If you are / do become VAT registered, then you need to consider the place of supply of services.

Finally, in terms of reclaiming VAT, the answer is - it depends. VAT is charged in the UK, so you may be able to reclaim it from UK suppliers. If your suppliers are outside the UK, then the position can be far more complicated - you may be required to do a 'reverse charge'. Read this guidance from HMRC.

My advice would be to avoid registering for VAT until you have to (since the admin burden will be high) and seek professional advice from your accountant / tax adviser. It's a very complicated area!

 

[Aaron Burchett]

Hi, Thanks for your help...

I don't plan on registering in year 1 but may have to come year 2. I have booked an appointment with a VAT specialist to ensure I get my numbers correct.

Thanks for your help,.

 

[Idrees]

If you provide services outside UK, special VAT applies, where you first establish point of service provider and then other party's nature of business.

Generally if you provide services to comsumer then you can not recover the VAT but is you provide to businesses then you may be able to recover your VAT.