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No longer registered for VAT - client requests statement explaining this on invoice
Thread poster: Joanne Parker

Joanne Parker  Identity Verified
Local time: 02:55
Member (2002)
German to English
Sep 28, 2017

Hello,

I have been running a very small translation company based in the UK for the past 16 years, and have recently deregistered from VAT to save the company costs - it simply wasn't cost-effective or necessary for me to be registered.

I have been informing various clients abroad that I am no longer registered for VAT, and one client wrote today:

"I’ve been informed that the reason/law your company is no longer a VAT payer should be specified on the invoice. For example: ” xy is pursuant to article xy not paying VAT.” Could you please add this information to the invoice as well? Thank you!"

Does anyone know about this or been in a similar situation please? What legislation could there be?! This particular client is in Germany, so does anyone have any idea about what I could put on the invoice? I have asked my accountant but am still waiting for an answer.

Thanks in advance,

Joanne


[Edited at 2017-09-28 11:52 GMT]


 

Nikki Scott-Despaigne  Identity Verified
Local time: 03:55
French to English
Depends on country Sep 28, 2017

In order to satisfy French regulations, for example, I have a set form of words that explains that I am not VAT-registered. I refer to the particular article of the French Taxation Code (law) concerned and specify the type of legal structure I have and which means that I am automatically not able to charge VAT. It sounds as though Germany has a similar requirement.

Have you thought of posting your question in the German pages here?

That said, as your are registered and based in the UK, it is the UK rules 'n' regs that you have to satisfy. For convenience sake, it may be helpful to add something in German. There may be language requirements for the UK that mean you have to express all relevant details in English and not in German though.

I suspect that your accountant will come up with the best advice. You are paying him to do so, so make the most of it!

[Edited at 2017-09-28 12:36 GMT]


 

Tom in London
United Kingdom
Local time: 02:55
Member (2008)
Italian to English
None of their business Sep 28, 2017

Joanne Parker wrote:

Hello,

I have been running a very small translation company based in the UK for the past 16 years, and have recently deregistered from VAT to save the company costs - it simply wasn't cost-effective or necessary for me to be registered.

I have been informing various clients abroad that I am no longer registered for VAT, and one client wrote today:

"I’ve been informed that the reason/law your company is no longer a VAT payer should be specified on the invoice. For example: ” xy is pursuant to article xy not paying VAT.” Could you please add this information to the invoice as well? Thank you!"

Does anyone know about this or been in a similar situation please? What legislation could there be?! This particular client is in Germany, so does anyone have any idea about what I could put on the invoice? I have asked my accountant but am still waiting for an answer.

Thanks in advance,

Joanne


[Edited at 2017-09-28 11:52 GMT]


It's actually none of their business, but to keep them happy you could simply say

"The company turnover is below the threshold for VAT registration in the UK. For that reason VAT will no longer be applied to our invoices beginning from (specify a date)."

They don't need to know anything else, you don't need to consult anyone, there is nothing more you need to explain, and that is the end of the story. The only thing your clients need to do is....pay you on time.

The only regulations that apply to you (assuming you are resident in the UK and nowhere else) are the UK regulations. It would be illegal for you to attempt to comply with the regulations of any other country.

Personally, on my invoices I always add the following note below the amount payable: "VAT not applicable in accordance with UK tax law". I have never had any problems with that.

[Edited at 2017-09-28 12:46 GMT]


 

Nikki Scott-Despaigne  Identity Verified
Local time: 03:55
French to English
Yes Sep 28, 2017

Tom in London wrote:

Personally, on my invoices I always add the following note below the amount payable: "VAT not applicable in accordance with UK tax law".


Basically the same thing I do here, in France, to satisfy French regulations.


 

Christine Andersen  Identity Verified
Denmark
Local time: 03:55
Member (2003)
Danish to English
+ ...
If nothing else good comes of Brexit... Sep 28, 2017

... we can hope there will be an end to this incredible VAT discussion... The UK seems to be the only country in the EU without a simple VAT registration for small companies. I cannot understand why neither the CIoL nor the ITI nor HMRC can come up with a simple answer!

The None of Your Business answer may be correct, but it doesn't wash on the Danish tax authorities, who come down like a ton of bricks on small fry who may or may not be evading tax. Probably the same applies to tax authorities elsewhere, e.g. in Spain too...

Until quite recently, I was supposed to charge VAT if clients were private individuals or not VAT registered... and at 25% on top of my normal fees, that usually meant I sent UK clients to a colleague resident in the UK. Practically everyone else was VAT registered anyway.
VAT-exempt clients from the UK also meant a lot of hassle with my online tax returns, as they did not fit in any of the boxes... All other clients did.

I'll have to see it before I believe it, of course, but once the UK is out of the EU, it SHOULD mean that VAT is not applicable to transactions with countries in the EU. But Norway has a VAT system and VAT numbers... All I have to do is to put the client's VAT number and mine at the top of the invoice, and then I can forget about VAT.

Sorry, this is not helpful, but I can't help thinking on these lines every time someone from the UK asks about VAT...


 

Tom in London
United Kingdom
Local time: 02:55
Member (2008)
Italian to English
Opposite Sep 28, 2017

Christine Andersen wrote:

... the UK seems to be the only country in the EU without a simple VAT registration for small companies.


Quite the opposite. VAT registration in the UK is so simple that **you don't even need to do it** unless your turnover is more than £85,000 (€ 96,375 approx).

Isn't that simple enough for you?

BTW Brexit won't make any difference to that.


 

Christine Andersen  Identity Verified
Denmark
Local time: 03:55
Member (2003)
Danish to English
+ ...
By not having a VAT number, you simply cause a lot of hassle Sep 29, 2017

@ Joanne
Please don't take this personally, because I do understand the issue from your point of view - as there is no easy way out in the UK. Unlike Denmark, for instance, where it is mandatory if you earn more than DKK 50,000 gross - less than I make in two months - but it is also a postive advantage to be VAT registered.)

Tom in London wrote:

... VAT registration in the UK is so simple that **you don't even need to do it** unless your turnover is more than £85,000 (€ 96,375 approx).

Isn't that simple enough for you?

BTW Brexit won't make any difference to that.


It may be simple for you, but it is simply annoying and a waste of time for many other people.
By simply refusing to do anything about it, you simply never reach an answer.

I don't know how many times this has come up here and on other sites.

It is so simple that HMRC cannot explain shortly and simply how to fill the gap on invoices where practically everyone else has a VAT number.

It is so simple that it means translators have to ask again and again and again what to do about it... without finding a satisfactory answer. Everyone else simply asks clients for a VAT number - mine is DK 27093892 - and puts it on their invoice.

UK clients without VAT numbers simply mean a lot of hassle with tax authorities and obtaining evidence of residence in the UK and that tax has been paid, when the same transaction could be so delightfully straightforward.

I think Brexit is a disaster generally, but there may just be this one small advantage - if the UK REALLY manages to pull out of the EU, everyone else can say goodbye to all that hassle.

PS The Norwegians have VAT numbers for small firms like the rest of Scandinavia and the EU apart from the UK...


 

Tom in London
United Kingdom
Local time: 02:55
Member (2008)
Italian to English
NEver been a prob Sep 29, 2017

None of my clients in other EU countries have ever had a problem with me not having a VAT number.

 

Samuel Murray  Identity Verified
Netherlands
Local time: 03:55
Member (2006)
English to Afrikaans
+ ...
@Christine Sep 29, 2017

Christine Andersen wrote:
Everyone else simply asks clients for a VAT number ... and puts it on their invoice.


The simplicity stops when the client gives you a number that they think is their VAT number, but isn't, and you only discover this at the time that you submit your returns.

https://www.proz.com/forum/money_matters/314413.html

UK clients without VAT numbers simply mean a lot of hassle...


Yes, but this thread is not about UK clients.


 

Christine Andersen  Identity Verified
Denmark
Local time: 03:55
Member (2003)
Danish to English
+ ...
It is extremely simple to check VAT numbers... Sep 29, 2017

Vat numbers can be checked here:
http://ec.europa.eu/taxation_customs/vies/

-- which I do as soon as I get them, and then note them in my client list, which is formatted so that I can copy it over to the top of an invoice. I have only been given a non-valid number once or twice, and been able to sort it one way or another immediately.

This thread is largely about EU clients who have problems when working with agencies or translators in the UK who are not VAT registered.

My reaction is to turn jobs from non-registered UK clients down - also very simple - and tell them to search for a translator in the UK. If the job is small, then it gets unreasonably expensive for them if I have to charge for administration time, and if I don't, I don't get paid. I have enough other clients who do pay for my time ...

Over and out from me - these discussions never get anywhere, and there does not seem to be any satisfactory conclusion to them.
Except perhaps Q.E.D. icon_biggrin.gif


 

2G Trad  Identity Verified
Italy
Local time: 03:55
Member (2000)
English to Italian
+ ...
Current VAT law in UK Sep 29, 2017

Joanne Parker: Does anyone know about this or been in a similar situation please? What legislation could there be?! This particular client is in Germany, so does anyone have any idea about what I could put on the invoice? I have asked my accountant but am still waiting for an answer.

The current VAT law in UK is Value Added Tax Act 1994 (Schedules 1 and 3).

That said, I totally agree with Christine about Brexit, UK VAT, and VIES.

Cheers
Gianni


 

Katrin Braams
Germany
Local time: 03:55
English to German
+ ...
Required by German law Oct 1, 2017

German law requires companies which are not obliged to charge VAT to state the reason (= the law) which exempts them from VAT.

Just put a sentence at the bottom of your invoice saying:

Since I am a 'small business' [or whatever the appropriate reason in your country may be] as defined in section 123 XY tax law, I do not bill VAT.

This suffices the legal requirements in Germany.


 

Nikki Scott-Despaigne  Identity Verified
Local time: 03:55
French to English
GermanLaw1 Oct 1, 2017

As German law applies to those with businesses registered in Germany, surely that requirement does not apply to clients in Germany who are receiving invoices from other professionals in other countries?
The person who asked the question is registered in the UK and must satisfy UK regulations for both the limits for VAT and for what she has to put on her invoice.

The same requirement may exist under UK law. I would not be at all surprised if it did anyway.

[Edited at 2017-10-01 21:18 GMT]


 

Katrin Braams
Germany
Local time: 03:55
English to German
+ ...
Nikki Scott-Despaigne Oct 2, 2017

The German client is forced to charge VAT if the foreign service provider does not state the "reason" (i.e. the law) which exempts him/her from VAT payment. Just stating the respective paragraph number (e. g. section 5, article 3 UK tax law) will satisfy this German requirement, it is such a small thing, it's not worth any discussion with the client.

 

Nikki Scott-Despaigne  Identity Verified
Local time: 03:55
French to English
@GermanLaw1 Oct 2, 2017

Yes, I do understand the point you are making. It makes perfect sense.
The rule is the same in France: my invoices state that I am not liable for VAT and I provide the reference to the relevant article of the French Tax Code. If I did not clearly indicate that fact, under French law, my clients would be entitled to suppose that my invoice includes VAT.

The point I am making is that although it is not asking much to add the sentence to that effet, some accounting software does not make it easy to add extra phrases here and there.

(I also add a fair bit of other stuff which I am also required to state on my invoices in order to comply with French legislation. One day, there will be no room left to indicate how much I am charging the client!icon_wink.gif )

For information purposes: https://ec.europa.eu/taxation_customs/business/vat/eu-vat-rules-topic/vat-invoicing-rules_en

[Edited at 2017-10-02 23:22 GMT]


 
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