VAT rate - foreign companies

We sell our services and resell third party services to non U.K. companies (both in the EU and outside the EU). We don’t charge them U.K. VAT as we sell exclusively to businesses and so place of supply is where they belong. We confirm on the invoice that reverse charge mechanism may apply for the end user. But in terms of our VAT return, should we put the VAT rate as Zero rated so it shows in our U.K. VAT return or should it be Out of scope and not show in our VAT return at all? We also resell third party goods sometimes to non U.K. businesses. Goods are usually dispatched from the same country the customer is in and delivered to them - we handle the VAT/sales tax implications this creates for us in that country and register if we need to. But again we don’t charge the customer U.K. VAT as the goods do not enter U.K. customs at any point and are not dispatched from the U.K. either. In this case also should we invoice with zero rated or out of scope?

Whilst the supply of services to overseas business customers is outside the scope of VAT, if you use that code in some accounting software, it does not show the net sale value in Box 6 (indeed, it will not appear on the VAt return at all). So generally, code such sales to zero rate so that the net value hits Box 6 but without affecting the output tax due. mentioned here in below Notice &700/12), section 3.6, second but last bullet point "supplies which are outside the scope of UK VAT as described in Place of supply of services (VAT Notice 741A)" https://www.gov.uk/guidance/how-to-fill-in-and-submit-your-vat-return-vat-notice-70012 With regard goods, where the place of supply is determined by the location of the goods at time of dispatch, you do not need to record these on the UK VAT return, because you'll have declared those sales on the overseas VAT return. That may mean that your Box 6 on UK VAT return is not a true reflection of your actual turnover so you would need to factor that difference in when doing monthly reconciliation, etc.

Hi,

If you supply services under the general rule to overseas companies then these would be classed as outside the scope of VAT. However, the supply would still be reflected on your UK VAT return as a net supply in box 6.

You can see guidance below, specifically section 3.7

How to fill in each box on your return

If you sell goods within other countries and these goods are not in the UK at any time then these are outside the scope of VAT and would not appear on the UK VAT return.

Thank you.

Hi, Thank you for getting back to me. I just want to check that the following method is the best way to account for this in our accounting platform please. Effectively we need two account codes in our accounting platform, one for out of scope supply of services and one for out of scope goods. Both are of scope so the VAT is 0 but for the supply of services one the net amount will show in box 6 and for the other it will not be included in the VAT return at all. Thanks

Hi.
We are  not too familiar with specific accounting codes but this does sound correct.
You may just want to confirm this with the software provider.
Thank you.