Buying IT services/outsorcing - is it tax exempt? Buying IT services/outsorcing - is it tax exempt?
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  1. #1

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    Default Buying IT services/outsorcing - is it tax exempt?

    Hello

    I am considering buying IT services/outsourcing from a EU company for my UK registered LTD. This would be some assistance in programming for my company in what I am doing.
    How does that work from tax perspective? Is this expense tax deductible?
    What should I consider when buying services from abroad? I am a VAT FRS registered - does it make any difference when buying services from abroad?
    Do I need to register myself somewhere to do cross-border trading?
    If the fee is in foreign currency should I negotiate price in pounds or the other currency? How best to arrange for payments in foreign currency then?

    Regards

  2. #2

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    northernladuk's Avatar
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    Gave you tried googling some guides and basic information? Stuff like..

    Guide: A very short guide to: International VAT

    You'll even find guides on how to handle it in FA which I guess would be in your next set of questions.
    Buy services from EU – FreeAgent


    If you are buying services from a company dealing in Euros good luck negotiating the price in pounds.

    Don't forget to have a chat with your accountant as well.

    Cross border trading? I thought the point of the EU was to get rid of that?
    Last edited by northernladuk; 19th May 2019 at 17:42.
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    Quote Originally Posted by twickenkam View Post
    Is this expense tax deductible?
    Yes.
    If the fee is in foreign currency should I negotiate price in pounds or the other currency?
    If you think the pound is going to fall against the other currency, then take the other currency. If you want to know exactly how much you're going to pay, then negotiate in pounds.
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  4. #4

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    Thank you both for such quick responses!

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    They didn't exactly take more than about 3 seconds thought.
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    Quote Originally Posted by NotAllThere View Post
    They didn't exactly take more than about 3 seconds thought.
    Ditto
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  7. #7

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    Regarding VAT the service should in most cases be subject to the reverse charge because the place of supply is the UK. The supplier will need evidence that this is a B2B supply - usually they will want to see your VAT number.

    This means they will not charge any VAT and you account for the supply on your VAT return using the reverse charge procedure. This is dealt with outside of the flat rate scheme so it isn’t included in your flat rate turnover, it’s completely separate. The net effect is that you will charge yourself VAT and reclaim it on the same return.

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