ASK & DISCUSS INDEX

9 years ago - Paddy Robinson-Griffin

Hi Matt, I did look at this, but I hit a problem, perhaps I misunderstood, though.

My work is partly in the UK, partly deep offshore (eg UAE, Cairo, Lebanon). I do not charge VAT to the offshore clients, but couldn't find clear guidance on whether I'd be liable for the 12-14%-ish from the flat rate scheme on those large non-EU figures as well as the UK ones. What's your view?

9 years ago - Matt Dede

Hi Paddy,

Thanks for getting in touch, regarding the Flat Rate Scheme ("FRS").

Definitely an interesting query that you have raised. Have you looked at “VAT Notice 733” – section 6.3 and 6.4.

If the place of supply of your service is not in the EU, then your supply of services is outside the scope of VAT. You do not have to charge VAT or include it on your VAT return.

So, Lebanon, Cairo, UAE, USA, are all outside the scope of VAT. You therefore ignore them when calculating your Flat Rate Scheme Turnover ("FRST").

Any services supplied to UK companies, of course, is well within the VAT rules, so you would need to charge 20% VAT and then pay over the 12-14% to HMRC (depending on what sector you fall under).

If you have clients in the EU, this makes things more complicated as EU supplies will probably have to be included in your FRST, even though you might not charge the client VAT. In these cases the FRS can sometimes prove unfavourable.

Here, at TAP Media, our main focus is individuals like yourself in the media and entertainment sector, dealing with your tax and accounting affairs. Food for thought if you did fancy a change 

All the best,

Matt

8 years, 12 months ago - Marlom Tander

I use the FRS in my main business. It is def a case of "do the maths" but can produce nice extra margin if your customers are VAT registered and a lot of your costs are not, e.g. freelancers.

Even if the maths doesn't produce margin, it still has the benefit of simplicity if your T/O. (Simplicity for small biz is what it's for. Margin boost is a bonus).

Depending on the math, it can make it worth registering for VAT even before you have to. 50K T/O on a 10% scheme is about £5K extra PROFIT.

8 years, 12 months ago - Matt Dede

Hey Paddy, unfortunately, we don't provide a debt collection service. Sorry to hear that clients do not pay, i would suggest you always ask for 50% upfront, then at least you have something in the kitty :-) Sometimes it works, other times it don't. All depends on the client really.

8 years, 12 months ago - Matt Dede

Love it Marlam, switched on nicely! ;-)

8 years, 12 months ago - Matt Dede

*Marlom

8 years, 12 months ago - Paddy Robinson-Griffin

Yes indeed. And indeed I would have, but as I say, this time it was complicated. Clearly, never working with those people again!