Company being fishy about VAT - sanity check

[vwdan]

Hi All,

I pay a subscription for some online software (It's like a document management thingy). It's an American company, but they use PayProGlobal to process it - so I actually pay PayProGlobal and they produce the invoices.

I've recently realised that I haven't really been dealing with reverse charge VAT quite properly so I'm paying extra attention to what's what and how I'm filing things in FreeAgent.

I vaguely remember giving my VAT number when filling out some generic form, but most of these things either do nothing with it or they invoice you from Ireland or somewhere. Anyhow, to my surprise the invoice actually includes a non-obvious GB VAT number but is NOT a VAT invoice. Literally the only mention of VAT is their VAT number in amongst their address. I've e-mailed them and started a world of pain with somebody whose English is definitely not their first language. So far I've basically gotten this:

Firstly, we would like to clarify for you that as a non European business our VAT number starts with EU. We would like to assure that EU826013028 is a valid European VAT ID.

Since you have mentioned GBMYVATNUMBER on the checkout page and indicated a corporate purchase, the VAT has been applied for the purchase and you have not been charged taxes additionally. The price for the recurring payment remained 63.04 GBP

The problem is that the EU VAT number ain't the one on the invoice- it's a GB one. I sent them an invoice and got a reply which said "Oh yes sorry, it's GBXXXXX". And so the merry go round continues.

So, it's late where I am at the moment - can somebody confirm I'm not going mental here? They're a VAT registered GB company, I'm located in GB, surely they should absolutely be applying VAT to this invoice and providing me with a proper VAT receipt?

[vwdan]

Yeah, I fear I'm opening Pandoras Box here:

We would like to point out that if you are a business with valid VAT ID than you don't need to pay VAT. Please note that VAT is not included into the invoice for order ID XXXX, as far as you indicated already your Tax Number. Kindly review one more time

[TheCyclingProgrammer]

If you're making a B2B purchase of a service from a non-UK based supplier then they should not be charging VAT. Having supplied them with your VAT number that should satisfy them that it is a business purchase. You would apply the reverse charge to this supply.

However, if we're taking about electronically supplied services, they will also have an obligation to charge UK VAT on B2C transactions under the VAT MOSS rules. Whilst this shouldn't apply to a B2B transaction, its possible that in order to comply with B2C rules that they have chosen to register for VAT in the UK and are using that on their invoice instead.

As far as I understand it, if they have a UK VAT number, have charged you UK VAT and have given you a valid UK VAT invoice, then you can treat it like a normal supply (as if it were a UK-based supplier) and reclaim the input VAT.

So, to confirm they should either be:

1. Invoicing you with UK VAT added and supplying a valid UK VAT invoice with a UK VAT number on it or,
2. Invoicing you without adding any VAT as an overseas supplier.

I guess the bottom line here is, have they actually charged you UK VAT? If not, account for it under the reverse charge and forget about it. If they have, insist on a valid UK VAT invoice.

[Maslins]

What TCP said.

Are they invoicing you from a UK entity? If so, they most likely should be charging you UK VAT. If they're invoicing you from an overseas entity, and you gave them a valid UK VAT no, then typically they would not charge you UK VAT (and you do reverse charge).

[vwdan]

Yeah, it's a UK entity with a UK VAT number.

And to be honest, part of this is if UK VAT is being applied then I want to claim that back!

[TheCyclingProgrammer]

Yeah, it's a UK entity with a UK VAT number.

And to be honest, part of this is if UK VAT is being applied then I want to claim that back!

Ultimately it makes no difference if you pay and reclaim UK VAT or reverse charge it if they haven’t charged UK VAT, except in the former case you do need a valid VAT invoice (and they are obliged to provide one).