VAT and Reverse Charging Accountability

[gphoenix]

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I will be selling my own products which are purely information products, from a UK company. I am fairly clear on the EU VAT rules on who I charge VAT to and where I don't have to account for VAT.

What I am not clear on is the reverse charging rules. I will charge, say, £100 for an online course. I will pay an affiliate, say in the US, £50 for introducing the customer. Do I have to account for the payment in the VAT rules as a reverse charge. This will determine if I have to register for VAT, and will determine when I have to do this. I understand I don't have to actually pay anything, it's accounting for bit I am confused about

[Renners]

IANAA however the USA Affilaite is doing you a service hence the same as most affiliates they should submit an invoice (although in reality you create a self publishing invoice for them) As this is the case VAT is not charged for Non-EU Invoices so the reverse charge is not applicable.

Regards,
Renners.

[hrbs]

Since January 2010, the reverse charge rules for services are relatively straight forward for business to business (B2B) transactions i.e. VAT is accounted for by the customer, which in this case is you, as you are buying a service (advertising) from a non-UK supplier.

As a result you need to include the value of the service in your VAT threshold calculation and when registered, account for it under the reverse charge rules.

To quote HMRC ...

"The B2B general rule for supplies of services is that the supply is made where the customer belongs", and

"The reverse charge applies where a supplier, who does not have an establishment in the UK, makes a supply to a UK business customer and the place of supply of that service is the UK."

The reverse charge is further explained by HMRC at Section 18 of VAT Notice 741A (January 2010) ( HM Revenue & Customs ).

If you read the HMRC guide, remember that is only the B2B sections that are relevant as the supply is made by one business to another, not from a business to a customer (B2C).

For place of supply of services purposes ‘B2C supplies’ means supplies to:

a private individual
a charity, government department or other body which has no business activities, or
a ‘person’ who receives a supply of services wholly for private purposes.

Regards

Keith