My client has provided management consultancy services to a business based in Germany. The German business advised that they are not registered for VAT in Germany so my client has charged UK VAT under the general B2C rule but the customer is disputing this, saying no UK VAT should be charged as they are a business. Who is right?
This is actually a rather common question and something many suppliers misunderstand.
The Place of Supply of Services legislation simply refers to services being provided by one business to another business (B2B); the rule doesn’t restrict the rule to supplies to a VAT registered business.
Therefore, as your client services are provided B2B, the service is deemed to be made in Germany, whether or not the business customer is registered for VAT. It is therefore outside the scope of UK VAT and is instead supplied under the Reverse Charge.
Where a customer’s VAT registration status comes into play is in regard to a supplier being satisfied that the customer is a business.
If making B2B supplies the supplier must be satisfied that the customer is a business and VAT registration is a clear and definitive indicator that they are a business.
If the customer is not VAT registered then HMRC’s guidance ins section 6.3 VAT Notice 741A confirms that the supplier can accept other evidence to satisfy them, and HMRC, that the customer is a business. If they do not have this then they must treat the supply under the B2C rule
These rules will remain the same after the end of the Brexit transition on 31/12/2020.
Our client operates a car repair centre…
My client supplies blinds for…
Answer
My client buys high end, high value…
Q: My client is a…
My client is a business…
Having changed over to Vantage a couple of years ago we have been very satisfied with the service. Especially the claims handling and technical advice lines for both our firm and insured clients on employment and business legal matters. The webshop Vantage offer allows our clients to join and pay electronically. This positively impacts our bottom line and makes things simple and efficient for our clients.