VAT on services to EU by partnerships and sole traders

I supply translation services to clients in various countries in the EU, as a VAT-registered partnership. The place of supply is always the UK. I have always accounted for these transactions by quoting the EU client's VAT number on the invoice and entering the total in the quarterly EU sales return as a service. Please could you tell me what the procedure will be after 1 January? All the information we have been sent by HMRC relates only to the export of goods - there is never any mention of services at all. Is it simply a case of continuing as I am now but with no need to include the client's VAT number on the invoice? And presumably the procedure for my clients would be the same as when dealing with suppliers in other non-EU countries?

In a nutshell - for a VAT-registered sole trader or small partnership, and a regular supplier to clients in EU countries of a service (translation), said service being carried out in the UK. What will the changes be? If any?

When you say the place of supply is the UK, do you mean that you are in the UK? The place of supply is where the recipient belongs ie the EU so no UK VAT is chargeable on a B2B supply. Going forwards this will not change but there will be no requirement to record a VAT number or complete an EC Sales list.

Yes, I'm in the UK, the place where the work is actually carried out, and the clients are abroad. Thanks for clarifying this (including the question relating to place of supply).

Hello Louise. Apologies, it is not completly clear in what respect you are wishing to know if there will be any changes. Currently you would be required to know the place of your supply of you services, following the Place of Supply of services rules which can be found in VAT Notice 741A Place of supply of services (VAT Notice 741A) However, if you are looking for information on how to account for your services to the EU after the transition period has ended I would invite you to refer to the following link: Brexit transition: time is running out Thank You.

Hello Colin. If you belong in the UK and the place of supply of your services is the UK, you must charge any UK VAT due and account for it to HMRC regardless of where your customer belongs. Please refer to VAT Notice 741A, section 3 for further information relating to the place of belonging. Thank You.

"If you belong in the UK and the place of supply of your services is the UK, you must charge any UK VAT due and account for it to HMRC regardless of where your customer belongs." Actually I think some confusion has arisen - I should have specified that these are all B2B services. My clients in the EU are almost excusively VAT-registered businesses themselves. The link you supplied relates to private consumers. I'm fairly confident that the place of supply in this case is the client's country. As far as clarifying what it is I need to know, I just want to know what I need to do differently from now. I've looked at all the information available and registered on the "Time is running out" site but everything I'm sent in the form of letters and e-mails seems to relate to goods and/or larger businesses. The way I operate now -. For clients in the UK, I add VAT to the invoice and account for in the usual way. For clients in the EU (all businesses), I invoice in the local currency and quote their VAT number on the invoice, and record the transactions on the EC Sales List. Non-EU clients abroad - also all businesses - the place of supply is the foreign country and therefore outside the scope of UK and EU VAT arrangements.

Provided the place of supply rules don't change after 1 Jan, your processes should largely stay the same. You're making B2B supplies and, under the "general rule", the place of supply is your customer's EU member state. The customer is already required to account for the VAT in their country using the reverse charge, and will continue to do so. Your supply is outside the scope of UK VAT, but with the right to reclaim input tax on your costs, as the nature of the supply would make it taxable if supplied in the UK. Assuming that you're not in NI, EU Sales lists should no longer be required, according to HMRC guidance here: https://www.gov.uk/guidance/vat-how-to-report-your-eu-sales#from-1-january-2021. This guidance does mention services as well as goods. I think you still need to be able to prove that your customer is in business, otherwise your supply might be regarded by default as B2C. The easiest way to do this is by continuing to obtain your EU customers' VAT registration numbers.

Thank you for that. It certainly makes sense. I'm considering quoting my Swiss clients' VAT numbers too, if it makes things smoother. Your comment that the supply might be regarded by default as B2C is interesting, though - I can count on one hand the number of B2C supplies I've made in over 25 years of trading, and none of them has been for a client abroad!

Hi The place of supply of services rules are set out in notice 741a. Section 6.3 explains the B2B general rule if your service falls under this then the VAT liability will be where the customer belongs: The place of supply rules for services Thankyou. Regards.

Thanks for that reference. I finally found what I do under section 12.6: Services of consultants, engineers, consultancy bureaux, lawyers, accountants, and other similar services - data processing and provision of information, other than any services relating to land.

Hi Can anybody reply to my query? How to treat freelancer cost for the VAT return. The business is translating and most of the expenses involved with freelancers. Some freelancers have been charged VAT and most of them have not been charged VAT. Those who have not been charged how to treat these expenses? Kind regards

I'm a bit confused - why would the freelancers be charged anything if they are suppliers for your business? Do you mean some of them charge you VAT and others not? Not all freelance translators are registered for VAT.

Thank you, Louise. You are right some of the freelancers charged VAT and most of them they have not charged VAT. For EC sales those we have charged VAT I am treating as Std sales and reverse charge VAT I am treating as zero rates sales. All the reverser charge transactions I am putting in the Box 8 and Box 9 I am not putting any thing. Can you please advise me what I must put in the BOX -2? Your advice will be highly appreciated. I would be grateful if you provide me with some guidance.

Hello Louise Gough
The Government has confirmed that the VAT place of supply rules for services will remain broadly the same for UK businesses when the Transition Period ends on 31 December 2020.
Except there will no longer be any distinction in treatment between supplies with the EU and those with countries in the rest of the world.
Invoicing requirements will remain the same. UK businesses will no longer be required to complete an EC sales list when supplying services to businesses located in the EU.
Further information on services can be found in VAT Notice 741A: Place of supply of services (VAT Notice 741A
Regards,
 

Thank you for clarifying the post-Brexit situation regarding place of supply rules and VAT treatment.

Hi Diponkar, I'm sorry but I can't help with this as I'm a sole trader and not an agency. It might be better if you post the question again as a new thread.

Hi diponkar nath,

Firstly I just want to apologies for the delayed responses.

I would refer you to VAT Notice 700/12. This will explain how to account for expenses in you VAT Return. 

Please see section 3

How to fill in and submit your VAT Return (VAT Notice 700/12)

Please refer to section 5 of VAT Notice 741A ‘Place of supply of services’ for guidance on the reverse charge. In particular, paragraph 5.2 explains how the charge works and which boxes to complete on your VAT return.

Place of supply of services (VAT Notice 741A)

Thank you. 

Hi Admin We provide legal services to EU business so b2b services. post Brexit- do we no longer need to reverse charge invoices? do we treat it as same rule for outside the EU invoices i.e. b2b outside the scope of UK vat and not reverse charge.

Hi, This is correct. From 1 January 2021 following the end of the transition period with the EU the VAT rules applying for supplying services between the UK and EU member states will become the same as the current rules for supplying services from the UK to outside the EU. Please refer to VAT Notice 741A ‘Place of supply of services’, which explains how to determine the place of supply of your services and where they will be liable to VAT. Place of supply of services (VAT Notice 741A)