Legal clause giving exemption to liability for VAT registration in UK
Thread poster: sarahprice

sarahprice
United Kingdom
Local time: 21:52
French to English
+ ...
Jul 3, 2018

I am a UK-based sole trader who is registered with the tax authorities in the UK but not liable for compulsory VAT registration in the UK as I earn below the annual income threshold. I am therefore not registered for VAT in the UK. I have a new client based in Germany who is asking me to state on my invoice under which clause number of UK fiscal law I am exempt from paying VAT in order to satisfy the German tax authorities. I have absolutely no idea as it has never been an issue before. Is anyon... See more
I am a UK-based sole trader who is registered with the tax authorities in the UK but not liable for compulsory VAT registration in the UK as I earn below the annual income threshold. I am therefore not registered for VAT in the UK. I have a new client based in Germany who is asking me to state on my invoice under which clause number of UK fiscal law I am exempt from paying VAT in order to satisfy the German tax authorities. I have absolutely no idea as it has never been an issue before. Is anyone able to advise me in this regard? Many thanks in advanceCollapse


 

Michael Beijer  Identity Verified
United Kingdom
Local time: 21:52
Member (2009)
Dutch to English
+ ...
Hmm, no idea. However, … Jul 3, 2018

… one of my German clients (a decent-sized, very professional agency) asked me to add the phrase "Reverse Charge" to my invoices to them, so now I now state:

Reverse Charge; see ‘VAT Notice 741A: place of supply of services’.
Unique Taxpayer Reference Number (UTR): XXXXXXXXXX.


HTH!

Michael


[Edited at 2018-07-03 18:54 GMT]

[Edited at 2018-07-03 21:10 GMT]


 

Samuel Murray  Identity Verified
Netherlands
Local time: 22:52
Member (2006)
English to Afrikaans
+ ...
Just a wild guess Jul 3, 2018

sarahprice wrote:
I have a new client based in Germany who is asking me to state on my invoice under which clause number of UK fiscal law I am exempt from paying VAT in order to satisfy the German tax authorities.


Could it be the "HM Revenue & Customs VAT Notice 700/1: supplement, updated 13 April 2018"?






[Edited at 2018-07-03 19:07 GMT]


Thomas Pfann
 

André Sainderichin  Identity Verified
Belgium
Local time: 22:52
Member (2014)
French to Dutch
+ ...
It's not VAT reverse charge Jul 4, 2018

Hi,

It's EU common VAT law, I don't know how (or where) it was transposed in UK law.
Why don't you call the HMRC VAT helpline on 0300 200 3700?

I won't go into details, but you most definitely cannot "reverse charge" VAT, because that's only possible for VAT registered traders.

Good luck,
André


 

Tom in London
United Kingdom
Local time: 21:52
Member (2008)
Italian to English
deleted Jul 4, 2018

x

[Edited at 2018-07-04 08:00 GMT]


 

Tom in London
United Kingdom
Local time: 21:52
Member (2008)
Italian to English
Don't do anything Jul 4, 2018

sarahprice wrote:

I am a UK-based sole trader who is registered with the tax authorities in the UK but not liable for compulsory VAT registration in the UK as I earn below the annual income threshold. I am therefore not registered for VAT in the UK. I have a new client based in Germany who is asking me to state on my invoice under which clause number of UK fiscal law I am exempt from paying VAT in order to satisfy the German tax authorities. I have absolutely no idea as it has never been an issue before. Is anyone able to advise me in this regard? Many thanks in advance


I've been invoicing Italian clients, from here in the UK, for many years.

You don't need to do anything and you don't need to explain anything - to anyone, in any country.

All you need to do is write on your invoice:

Amount payable: Euro xxxxxx
VAT not applicable

And that's all. Nobody has ever queried this. Most intelligent accountants know that the UK has a VAT threshold of £85K. If they don't they should look for another job.

If you're earning more than £85K - chapeau! But in that case yes, you do need to apply VAT.

[Edited at 2018-07-04 07:54 GMT]

IMPORTANT P.S.

As a UK resident you have no obligations to the German tax authorities and you should not have any dealings with them. You should (emphatically) not attempt to understand any requirements they may impose on you. In fact were you to do so, you might be breaching UK regulations.

Unless, of course, you are also resident in Germany (for tax purposes).

[Edited at 2018-07-04 08:00 GMT]


Joe France
Thomas Pfann
Daryo
 

Thomas Pfann  Identity Verified
United Kingdom
Local time: 21:52
Member (2006)
English to German
+ ...
VAT exemption in accordance with UK law, HMRC Notice 700/1 Section 2 ff Jul 4, 2018

I agree with Tom. It is not our job to adapt our invoices to the peculiarities of each country and the special requests from each customer's accountant.

Having said that, though, I do have a note on my invoices stating "VAT exemption in accordance with UK law, HMRC Notice 700/1 Section 2 ff". So if you want to make your German client happy, something like this should do the trick.


Tom in London
 

sarahprice
United Kingdom
Local time: 21:52
French to English
+ ...
TOPIC STARTER
Thank you Jul 5, 2018

Thank you for all of your replies. I think you are all right in stating that it is not up to us to pre-empt any issues the local tax authorities may have with our invoices and I think my client is being slightly overzealous. However, for the purpose of satisfying my client I am just going to add the statement about VAT notice 700/1 to my invoice as mentioned by a couple of you and I think that should do the trick.

 

Michael Beijer  Identity Verified
United Kingdom
Local time: 21:52
Member (2009)
Dutch to English
+ ...
Thanks for the info André! Jul 5, 2018

André Sainderichin wrote:

Hi,

It's EU common VAT law, I don't know how (or where) it was transposed in UK law.
Why don't you call the HMRC VAT helpline on 0300 200 3700?

I won't go into details, but you most definitely cannot "reverse charge" VAT, because that's only possible for VAT registered traders.

Good luck,
André


I actually previously stated something like "VAT not applicable", but when my German client asked me to put "Reverse charge" on it, I just did it without giving it much thought.

I think I'll state "VAT exemption in accordance with UK law, HMRC Notice 700/1 Section 2 ff" on any future invoices, if the client asks for something. Otherwise, I'll just do what I always do … which is state nothing special, which has worked for 99% of my clients for many years now.

Michael


 

Samuel Murray  Identity Verified
Netherlands
Local time: 22:52
Member (2006)
English to Afrikaans
+ ...
Splitting hairs, but Jul 5, 2018

Michael Beijer wrote:
I think I'll state "VAT exemption in accordance with UK law, HMRC Notice 700/1 Section 2 ff" on any future invoices, if the client asks for something.


Strictly speaking, though, you are not exempt from VAT if you're not registered for VAT. If you're not registered for VAT, then VAT does not apply, but you're not exempt from it. So really the line should read "VAT not applicable, in accordance with UK law, HMRC Notice 700/1 Section 2 ff". Don't you think?

[Edited at 2018-07-05 10:21 GMT]


Thomas Pfann
 

Peter Shortall  Identity Verified
Local time: 21:52
Member
French to English
+ ...
Legislation Jul 5, 2018

I am not sure whether a notice posted on the HMRC website amounts to a law. In case it doesn't, this is what I used to put on my invoices to a former client based in another EU member state who required me to state the legal basis on which I refrained from charging VAT:

"In accordance with Schedule I to the Value Added Tax Act 1994, in conjunction with the Value Added Tax (Increase of Registration Limits) Order 2007, no VAT is chargeable as total annual turnover is below the minimum
... See more
I am not sure whether a notice posted on the HMRC website amounts to a law. In case it doesn't, this is what I used to put on my invoices to a former client based in another EU member state who required me to state the legal basis on which I refrained from charging VAT:

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

[Edited at 2018-07-05 10:28 GMT]
Collapse


Gareth Callagy
 


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Legal clause giving exemption to liability for VAT registration in UK

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