Charging VAT when invoicing
Thread poster: Alberto Arias Pérez

Alberto Arias Pérez  Identity Verified
United Kingdom
Local time: 14:20
English to Spanish
+ ...
Oct 16, 2010

Hello, forum.

I fairly recently became self-emloyed in the UK and I am very confused as to VAT requirements on invoices.

I have read in several forums different answers for similar questions and I don't know if I need to add VAT to my invoices. I know that I don't need to register for VAT unless I earn something like £68,000 a year, but I am not sure if I need to add the 20% VAT when I charge for my services and if I need to include my Unique Tax Payer ID or something of the sort (since I don't have a VAT number) on them.
Can someone please help me with this?

Thank you very much in advance,

Alberto Arias


 

Neil Coffey  Identity Verified
United Kingdom
Local time: 14:20
French to English
+ ...
You have nothing to do with VAT... in principle... Oct 16, 2010

Alberto Arias Pérez wrote:
I have read in several forums different answers for similar questions and I don't know if I need to add VAT to my invoices. I know that I don't need to register for VAT unless I earn something like £68,000 a year, but I am not sure if I need to add the 20% VAT when I charge for my services and if I need to include my Unique Tax Payer ID or something of the sort (since I don't have a VAT number) on them.
Can someone please help me with this?


Firstly, this is how it works "in principle":
- your Unique Taxpyer reference is essentially a private number between you and HMRC; there is absolutely no need to disclose it to any clients. (If they were *employing* you in the UK, then you would disclose it because it appears on HMRC documents that you pass to employers. But that's not thecase for a freelancer.) On the other hand, your invoice *should* include your trade name (and presumably the address you registered with HMRC.)
- If you're below the turnover threshold on total income from UK clients, you don't need to be VAT-registered.
- If you're not VAT registered, you don't charge VAT.
- In other words, if you're based in the UK, you can run a perfectly viable, legitimate translation business without needing to be VAT registered.

Unfortunately, in *practice*, people in some other EU countries sometimes have trouble understanding this, because in other countries, the VAT threshold is much lower, so that in practice many more translators and small business in general end up being VAT-registered. This means that:

- You might have to educate clients that your business is perfectly legitimate even though you don't have a VAT number.
- You might have to go through extra hoops with some clients in some countries with not having a VAT number. HMRC can provide you with a "Tax Residence Certificate", which is essentially a signed statement that you pay all your tax in the UK, and for some clients this meets their bureaucratic requirements. (However, for some reason it takes them about 2 months to produce one in my experience, so you may want to consider whether you can wait an extra 2 months for payment from such clients...)
- Spain is notoriously problematic -- from various reports on this site, their tax office appears to require a VAT number "and that's that".

So basically, you're perfectly legal... you'll just need to weigh up as you go along how much trouble not being VAT registered causes you in practice.


 

Alberto Arias Pérez  Identity Verified
United Kingdom
Local time: 14:20
English to Spanish
+ ...
TOPIC STARTER
Thanx Oct 16, 2010

Thank you so much Neil.

I suspected what you are saying was true, but after seeing several contradicting responses elsewhere I was a bit confused.

I do know it is much more complicated in Spain (even just signing up as a freelance translator takes extra, and I mean EXTRA paperwork, just because we seem to be under a special category of service providers).

In any case, thank you very much for your prompt and helpful response.


 

Maria Hoskins  Identity Verified
United Kingdom
Local time: 14:20
Member (2011)
Spanish to English
I would like to add my thanks Jan 28, 2011

As someone who has just started to look for translation freelance work and had questions in this area, I would also like to thank you for explaining this so clearly.

 

Michael Watson  Identity Verified
United Kingdom
Local time: 14:20
Member (2006)
German to English
+ ...
Useful link about translators and VAT Mar 31, 2015

Very useful information.

There is also a useful link here which provides similar information and possibly more detail:

http://www.translatorscafe.com/cafe/article24.htm


 

Patrice Da Lage
Cambodia
Local time: 14:20
Member (2009)
English to French
+ ...
NO VAT WITHIN THE UK ONLY Nov 15

The no applied VAT rule because below threshold is only right for sales within the UK but not within the EU. To invoice services within the EU you are required to have a VAT number. This might again change with the BREXIT.

ahartje
 

Tom in London
United Kingdom
Local time: 14:20
Member (2008)
Italian to English
WRONG Nov 15

Patrice Da Lage wrote:

The no applied VAT rule because below threshold is only right for sales within the UK but not within the EU. To invoice services within the EU you are required to have a VAT number.


WRONG.


spaniel
Thomas Pfann
 

spaniel
United Kingdom
Is VAT 0% or VAT exempt? Dec 6

The previous comment is correct. As far as the UK is concerned, one does not have to be VAT registered to invoice companies in the EU (unless you are in the happy position of earning over £85,000. However, Spain seems to insist on VAT numbers. What I cannot work out, though, is whether the UK sees translation services to the EU as exempt of VAT or charged at 0%...? Presumably the latter, as you are not allowed to be VAT registered if providing services that are exempt of VAT. If it's o% you still have to invoice that and declare it on VAT returns.

 


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