"Reverse charge" not stated on vendor invoice

Hi, We are a UK LTD company VAT registered and established in both the UK and Germany. We purchased a technical due diligence service, in relation to a property we are purchasing in Germany. This service was purchased from another UK LTD company. The invoice received makes no mention of VAT. The vendor claims that is because they are not VAT registered in the EU. But in this case, should the invoice not state "reverse charge", or this not necessary? As I thought it was both a UK and EU requirement to state "reverse charge" clearly as necessary, then the vendor wouldn't have a leg to stand on. As the place of supply is Germany, would the UK vendor have to follow EU invoicing obligations? Is there any risk in general of, accounting via the RC where it doesn't say so on the invoice, say for example if the PoS was UK?

Since Brexit, the UK is not in the EU so UK is no longer required to issue invoices with "subject to reverse charge" although it is still helpful to include such wording if only because the recipient knows they have to do something on their VAT return.....but there is no legal requirement for a UK company to state reverse charge is applicable. The UK supplier of "due diligence services", if they are engaged to supply the service to your UK entity, then that should have been subject to UK VAT (UK supplier to UK customer). There is a separate argument as to whether the due diligence" services are land related services, if they are land related then the place of supply could be Germany but that would mean the UK supplier is required to register for VAT in Germany and charge German VAT. If you treat the invoice as reverse charge then there is no loss to the revenue/minimal risk, it would be an issue if you are partially exempt because you would be declaring output tax in Box 1 but not reclaiming the full amount in Box 4, perhaps query the VAT position with the supplier, it does not send a good message where you are seeking due diligence/professional services and the VAT treatment is not made clear to you (in terms of as to why no VAT has been charged)...maybe something as simple as the supplier has invoiced your German establishment but still no requirement on the UK to add "subject to reverse charge" on the invoice.

Hi. If the German company are supplying you with a service whose Place of Supply is in Germany then it can only fall under German VAT. If they are registered in Germany then they would charge you German VAT for the supply. If there is no requirement for the supplier to register for VAT in Germany then there will be no VAT to charge on the supply . The service would not fall under reverse charge because the Place of supply is outside the UK and the supplier is within the UK. Please see the information below: Place of supply of services (VAT Notice 741A)   . Thank you .

 

Hi Jay Thanks very much for your response! So I understand that it is no longer a requirement to state "reverse charge" on UK invoices. I know that this is an HMRC forum, but on on the basis that the PoS is Germany, wouldn't a UK entity theoretically be required to follow German/EU invoicing rules? I don't follow that the TDD service would be subject to UK VAT when we have a fixed establishment in Germany as I think our Germany establishment would clearly be deemed to be more closely connected to the service than our UK business establishment (leaving aside the land-related argument). Thanks, I'm in general agreement with the rest of your points.

Hi HMRC admin Apologies, I should have clarified that I was referring to reverse charge away from the UK, in this case Germany as that is where our relevant company is established and is purchasing the service from. The vendor is not established/VAT registered in Germany. I was just interested to see if there were any known invoicing requirement for UK companies as even for UK invoicing there was previously a requirement to state "reverse charge" where applicable. Anyhow, thanks for your help!

Hi RVNmax,
There are no invoicing requirements for a UK company making supplies overseas which are subject to reverse charge by the overseas customer.
The UK company can state that the service is subject to the reverse charge in the destination country but there is no requirement for this.
Thank you.