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We are a us based company. We have a question about vat.

Hello. We are a us...
Hello. We are a us based company.
We have a question about vat.Essentially we connect a client in the UK with a client who could be anywhere in the world.We handle the payments.We take money from the client and hold it while the project is completed by the second client.The tax invoice shows our company.The issue we are being told by the client in the UK is that if they are doing a job for another client in UK that they need charge VAT.However it’s us in the USA who is paying them.So do we need to pay VAT?Thanks
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Answered in 8 hours by:
11/13/2017
bigduckontax
bigduckontax, Accountant
Category: UK Tax
Satisfied Customers: 5,329
Experience: FCCA FCMA CGMA ACIS
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Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

The work is being done in the UK so the VAT charge is perfectly proper. GThe 'place of supply' is in the UK. Here is the pithy guidance from the UK Gov Web Site:

'If you are in the UK and the place of supply of your service is in the UK, you charge and account for VAT according to UK VAT rules.'

I am so sorry to have to rain on your parade.

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Customer reply replied 9 months ago
we are a USA company and we need to pay VAT? We are not in the UK. We are in the USA.
Customer reply replied 9 months ago
It says this on that website.“Out of scope
Some goods and services are outside the VAT tax system so you can’t charge or reclaim the VAT on them. For example, out of scope items include:goods or services you buy and use outside of the EU”So I would interpret this to mean that the UK client does not charge us VAT.Or am I reading that incorrectly?

Sorry, you are. The place of supply of this service is the UK, so the charge is quite correct. Were these goods being exported then the supply would be zero rated, but as this is a service the treatment is different.

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Customer reply replied 9 months ago
Following up. Reading this page it says that the service being provided is NOT subject to charging VAT.http://www.brighton-accountants.com/blog/vat-uk-usa/It is it the artistic performance industry. And the voice actor is supplying us (a company) an audio file.“Under the general rule, if the service is being supplied to a consumer (rather than a business) in the USA, it will be subject to UK VAT. This means that UK VAT must be charged at the usual UK rate, either standard rate, reduced rate, zero-rated or exempt. The UK business will account for VAT in the usual way.If the service under the general rule is being supplied to a business customer in the USA, it will be outside the scope of UK VAT (UK VAT is not charged). Some evidence of the business purpose should be obtained.”We are not a CONSUMER. we are a BUSINESS.we are purchasing an audio file from a voice actor.Thanks
Customer reply replied 9 months ago
To clarify the voice actor is selling us a digital audio file.

This is the first mention of a performance. You should return the invoice to the supplier and ask him to issue one without the addition of VAT.

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Customer reply replied 9 months ago
Ok. So to clarify. We do not need to pay the voice actor in the UK tax?Any government official documentation of this please?

It is standard VAT practice for a zero rated supply..

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Customer reply replied 9 months ago
Thanks. Is there any official govt document we can show the voiceactor

There is no need, the supply is zero rated, all he needs to do is issue a correct one charging VAT, but at 0%.

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Experience: FCCA FCMA CGMA ACIS
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