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tax briefcase

When a UK business makes sales to overseas customers, it can be a little confusing at first when deciding how to treat VAT.  Here are a few tips for preparing invoices for export sales of services from a UK supplier’s perspective. Be sure to check out our other guide for how to invoice for goods which are slightly different.

The following applies to a UK trader who is VAT registered.

  • If the customer is in a country within the European Union, then the invoice should not contain VAT as the sale is considered to be zero rated. Note: Unlike the supply of goods, for the supply of services to be zero rated, the customer must merely be a business and does not have to be a VAT registered business.
  • If the customer is in the European Union and is not a business ( ie – is a consumer), then the sales invoice should be prepared including VAT
  • If the customer is outside the European Union, the invoice should be treated as zero rated regardless of whether the customer is either a business or a consumer. The customers VAT number is not required.

There are a few other items which are also important when preparing documentation for exports;

  • The basic rule for establishing where a services transaction is deemed to have taken place is usually the location of the customer.
  • Zero rated VAT is later dealt with on the UK suppliers VAT return using the reverse charge mechanism.
  • All of the above applies only to UK companies who are VAT registered.
  • Sole Traders who are not VAT registered must not charge VAT under any circumstances.

Transform Accounting are Chartered Management Accountants and Tax Technicians able to assist with personal tax returns, sole traders and company payroll whilst specialising in limited companies, consultants, contractors and business start-ups. Fixed fee packages are available as are free initial consultations. Customer references are available on request.

See www.transformaccounting.co.uk or contact Jacinta Smith on 01277 365447

Writtle AccountantTransform AccountingEssex Accountants

 

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