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 Changes to VAT on Cross-Border ServicesFor VAT registered UK limited companies supplying services abroad; important changes came into effect on the 1st of January 2010. The previous rules were based on the 'place of supply' as determined by the 'place of belonging'. The basic rule that the VAT is charged where the supplier is established has changed to the VAT being accounted for where the customer is established. The following changes came into effect on the 1st of January 2010: Place of Supply rule - BN74 VAT will be charged to where the supplied service is being consumed; i.e. where the customer is established, so you will no longer charge VAT from the UK, when providing services abroad. Where the services supplied are made to a non-business customer the rules remain unchanged and the supplier will still charge VAT. Time in which to account for VAT - BN75 Where the supply is a one off, VAT will be accounted for at the end of the supply; or by the payment date if it is earlier. For continual services, VAT will be accountable at each billing period; or payment period if it is earlier. For continuous supplies that are not subject to billing or payment periods the VAT will be accountable at 31st December each year or the payment date if it is earlier. EC Sales Lists - BN76 All UK businesses supplying services to EU countries where the VAT is accountable in that country under the reverse charge procedure will be required to complete and file EC Sales Lists (ECSLs) to HMRC. These detail the customer VAT number and the net value of the sales at each calendar quarter. New time limits will apply for submitting returns from currently six weeks to 14 days for paper submissions and 21 days for electronic filing. The VAT Refund Process - BN77 For businesses that incur VAT in another country a new electronic filing system came into effect on the 1st of January 2010 enabling you to claim the refund in the UK instead of in the country the supply is being made. Claims will be able to be made for up to nine months from the end of the calendar year in which the supply was made. HMRC will have up to four months in which to make the refund (8 months if there is a dispute) and the member state of refund will be subject to interest if the business has supplied the correct information and the deadline was not met. Schedule 5 of the VAT ACT 1994 - Services supplied where received Schedule 5 sections 1-6 will be repealed so that services of consultants, engineers, lawyers, accountants, data processing, banking, financial, insurance and other similar services who currently charge VAT for their services to businesses will no longer have to. VAT will be accounted for by the consumer in their country. Services provided to non-business consumers will remain the same; VAT will be charged by the supplier. Other Changes: Cultural or artistic services From 1st January 2011 and 2012 there will be further changes for certain industries, namely, (of both business and non-business customers) cultural, artistic, sporting, scientific, educational and entertainment VAT will be chargeable where the event takes place. Useful Links: Cross-Border VAT Changes effective 1st January 2010 BN76 - EC Sales Lists |
