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Issue of invoices from UK to EU customers without VAT
Thread poster: Raffaella Magi McCann

Raffaella Magi McCann  Identity Verified
United Kingdom
Local time: 08:31
English to Italian
+ ...
Apr 7, 2008

Dear All

I was trying to find the answer to my query in the past forums but I couldn't find anything. So I apologise in advance if the issue I am going to talk about has been discussed before.

First, I would like to say that I have been working as freelance translator for several years and this is the first time that a client asked me to add the VAT number on my invoice. I am a UK resident, I pay my taxes here and, of course, I have to follow the UK taxation law. According to such law, a legal self employed (like me) which doesn't reach a yearly turnover of £50,000 (or £60,000, I don't remember the exact value) can't apply for a VAT number. I can legally work as translator being registered as self employed, having a NI number as tax code and not issuing invoices with VAT. My client is in Spain and he said that without my VAT number he can't process my invoice.

Is anybody there able to explain who is wrong and what I can add in my invoice to explain that the UK law doesn't let me have a VAT number (I wish I could reach £50,000 turnover!!).

Thanks alot in advance!

Raffy


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smvasc
Spain
Local time: 09:31
English to Spanish
+ ...
NI number.... Apr 7, 2008

Hiya,

I've had that problem before and in the end they used by NI number as the VAT number. Maybe you could try that.

Hope this comment helps...


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xxxJPW  Identity Verified
Local time: 08:31
Spanish to English
+ ...
here's what you need to know... Apr 7, 2008

Hi Raffaella,

The threshhold for COMPULSORY registration for VAT is £64,000 - or perhaps a little higher now that there is a new tax year starting...but there is a voluntary scheme as well: you can register whenever you like, if you wish to do so....but i don't know how long it would take to be issued a VAT number - perhaps your situation is somewhat urgent?

http://www.hmrc.gov.uk/

This is the link to the UK tax authority's website, I'm surprised you haven't bookmarked it!!

They have helpline numbers on there too, and there's no one better to ask about tax than the taxman himself.



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Sonja Allen  Identity Verified
United Kingdom
Local time: 08:31
Member (2005)
English to German
+ ...
Your tax number instead of VAT number is ok Apr 7, 2008

Hi

when I invoice my German clients, I give them my tax number (the reference number you get from the Inland Revenue for your tax return) and that is completely acceptable. I also put in a little sentence at the bottom of my invoice saying that "according to UK law I am not liable to VAT". You can try if that works with your client in Spain.

[Edited at 2008-04-07 14:06]


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Jenni Jelse  Identity Verified
Sweden
Local time: 09:31
Member (2007)
English to Swedish
+ ...
No need Apr 7, 2008

I'm not VAT registered and I have clients in Spain. They are a bit of a pain to work with when it comes to invoicing and payment because of the paper work, but they have accepted that I don't have a VAT number. And they still manage to pay me! I think I've just given them my NI number.

Good luck!


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Raffaella Magi McCann  Identity Verified
United Kingdom
Local time: 08:31
English to Italian
+ ...
TOPIC STARTER
thanks but... Apr 7, 2008

John Paul Weir wrote:

Hi Raffaella,

The threshhold for COMPULSORY registration for VAT is £64,000 - or perhaps a little higher now that there is a new tax year starting...but there is a voluntary scheme as well: you can register whenever you like, if you wish to do so....but i don't know how long it would take to be issued a VAT number - perhaps your situation is somewhat urgent?



John

many thanks for your help. Actually my situation is preatty urgent: I already issued the invoice but in the meantime I changed it adding my tax code or National Insurance Number. I know I should ask the Inland Revenue, but my info were based on what they told me when I started to work as freelance translator. It's interesting that now I can apply for VAT, even not reaching the turnover you just mentioned. Probably I don't like the fact that the client said they couldn't process my invoice without VAT. Maybe it is just an excuse for not paying! It's so frustrating!!

Raffaella


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Raffaella Magi McCann  Identity Verified
United Kingdom
Local time: 08:31
English to Italian
+ ...
TOPIC STARTER
exactly! Apr 7, 2008

smvasc wrote:

Hiya,

I've had that problem before and in the end they used by NI number as the VAT number. Maybe you could try that.

Hope this comment helps...


I think you are right, that's why I have changed my invoice adding my NI number. Unfortunately, so far I haven't received their confirmation...


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Raffaella Magi McCann  Identity Verified
United Kingdom
Local time: 08:31
English to Italian
+ ...
TOPIC STARTER
thanks for the sentence! Apr 7, 2008

Sonja Allen wrote:

Hi

when I invoice my German clients, I give them my tax number (the reference number you get from the Inland Revenue for your tax return) and that is completely acceptable. I also put in a little sentence at the bottom of my invoice saying that "according to UK law I am not liable to VAT". You can try if that works with your client in Spain.

[Edited at 2008-04-07 14:06]


Sonja

many thanks for suggesting the sentence to use to clarify my VAT position. I will try to use it for future invoices to EU clients. As said before, I believe what you and Jenni are saying is correct. I will wait for the client's reply.

Raffy


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Raffaella Magi McCann  Identity Verified
United Kingdom
Local time: 08:31
English to Italian
+ ...
TOPIC STARTER
I will wait patiently Apr 7, 2008

Jenni Jelse wrote:

...I think I've just given them my NI number.

Good luck!


Jenni

thanks for your contribution. This is something I have already done. I am just keeping finger crossed waiting the client's reply. Actually, I never worked with a Spanish client before but I guess it is like you say.

All the best

Raffy


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Ramon Inglada  Identity Verified
Local time: 08:31
Member (2006)
English to Spanish
+ ...
Same here - NIS should be enough Apr 7, 2008

Hi there,

Yes, I've been in the same situation with clients from Spain (and other countries) and I used my UK NIS number, as tax id number. I checked with the Revenue when I started freelancing in the UK and they confirmed this should be enough. So far, I haven't had any problem.

Also, you can register for VAT any time you want. As it has been already said, it's only once you reach the 64K (or so) threshold that it is compulsory to register. Keep in mind, though, that if you register you have to keep track of the VAT you charge (in the applicable cases) and file a VAT return periodically. It is also true that then you can claim the VAT back applicable to business expenses. In short, it depends on you and on what's more convenient in your specific case.

To sort out the situation now, just include you NIS number in the invoice. I've done it several times, no problem. I have indicated that this is my tax id number and that's it, everyone was happy.

Regards,

Ramon


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Raffaella Magi McCann  Identity Verified
United Kingdom
Local time: 08:31
English to Italian
+ ...
TOPIC STARTER
Claiming VAT on business expenses Apr 7, 2008

Ramon Inglada wrote:


...It is also true that then you can claim the VAT back applicable to business expenses. In short, it depends on you and on what's more convenient in your specific case...



Hi Ramon

do you know what type of business expenses I can claim the VAT on? I mean, for instance, if I buy a new laptop or new software...I am trying to work out if it is convenient to apply for a VAT number.

Thank you very much for your help.

Raffy


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Ramon Inglada  Identity Verified
Local time: 08:31
Member (2006)
English to Spanish
+ ...
VAT on business expenses Apr 7, 2008

Hi again Raffaella,

Well, I'm not an expert in VAT-registration at all, first of all because I've never been registered for VAT in the UK. I was, however, registered for VAT in the Republic of Ireland before moving to the UK, and yes, you can claim the VAT back on your business expenses, which is quite handy in cases like the ones you mention (computer equipment, software, and so on).

However, and as it's usually the case with the taxman, nothing is as easy as it seems. To be able to claim the VAT back on any expenses, first of all you have to start filing your VAT returns before you can claim any VAT back. In other words, first you have to pay the VAT and then, on later returns, you can claim part of this VAT back from applicable business expenses.

As always, the best thing to do is to contact the Revenue directly as their advice will definitely be more accurate than mine. My experience applies to the Irish system, but I believe the UK system is pretty much the same.

In my case, I haven't applied for VAT to keep things simple and to avoid having to file the VAT returns, plus I can't charge VAT to most of my customers (as they are from outside the UK) and there are other ways of claiming business expenses on your annual income tax return. In other words, I just tried to keep my "tax" life a bit simpler by not registering for VAT. I too wish I reached the threshold to have to register, but I'm afraid this is something I'll never have to worry about

Cheers,

Ramon


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Madeleine MacRae Klintebo  Identity Verified
United Kingdom
Local time: 08:31
Swedish to English
+ ...
Slightly longer explanation Apr 7, 2008

This is what I include in my EU invoices:

"In accordance with Schedule 1 to the Value Added Tax Act 1994, in conjunction with the Value Added Tax (Increase of Registration Limits) Order 2007, no VAT is chargable as total annual turnover is below the minimum UK threshold for VAT registration."

I can't remember how and where I researched (i.e. correct legal references), so I accept no liability if anybody decides to copy this.

Re. business expenses. I've never been VAT registered in the UK so I can't be sure, but I assume that VAT on the same kind of expenses can be reclaimed here as in Sweden. These expenses can be for computers, printers, paper and other expenses related to your business as well as phone and broadband charges. If these expenses are necessary for your business, all VAT should be reclaimable. If some part of them are also for private use there might, but only might, be some kind of reduction. As always, go to the horse's mouth; in this case the HMRC.


[Edited at 2008-04-07 19:07]


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Marijke Singer  Identity Verified
United Kingdom
Local time: 08:31
Dutch to English
+ ...
VAT Apr 8, 2008

I am VAT registered. Every 3 months you provide Customs with the details regarding what has come in and out and make up the balance. In my case, I usually get money from them since most of my customers are abroad but I still get the VAT I pay on business expenses back. Very peculiar situation.

It takes about 4 hours do deal with the paperwork every 3 months (I invoice between 15 and 20 customers in this period). The advantage of being VAT registered is that when it comes to do your tax return, it is already virtually done.


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Raffaella Magi McCann  Identity Verified
United Kingdom
Local time: 08:31
English to Italian
+ ...
TOPIC STARTER
Taxation law reference Apr 8, 2008

Madeleine MacRae Klintebo wrote:

This is what I include in my EU invoices:

"In accordance with Schedule 1 to the Value Added Tax Act 1994, in conjunction with the Value Added Tax (Increase of Registration Limits) Order 2007, no VAT is chargable as total annual turnover is below the minimum UK threshold for VAT registration."

I can't remember how and where I researched (i.e. correct legal references), so I accept no liability if anybody decides to copy this.


Hi Madeleine. Thank you so much for suggesting this sentence. I was looking for something that could mention the appropriate taxation law to justify the VAT exeption. I will ask the HMRC myself for the accuracy of the legal references. Of course I will not consider you liable for this, you deserve only a big thank you!

Re. business expenses. I've never been VAT registered in the UK so I can't be sure, but I assume that VAT on the same kind of expenses can be reclaimed here as in Sweden. These expenses can be for computers, printers, paper and other expenses related to your business as well as phone and broadband charges. If these expenses are necessary for your business, all VAT should be reclaimable. If some part of them are also for private use there might, but only might, be some kind of reduction. As always, go to the horse's mouth; in this case the HMRC.


[Edited at 2008-04-07 19:07]

Thanks also for the accuracy of your explanation. I guess, in my case, I need to carefully evaluate the advantage of applying for a VAT number.


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