VAT applicable on IT services made to non-EU company?

[mrbaboo]

Hi all.

I'm about to set up a limited company here in the UK to perform IT services (bespoke software development) for a company back in Australia. The work will be carried out 100% in the UK and the Australian company does not have any UK presence or registered office.

Does anybody know if VAT is applicable on the services I render to this client. My reading of Notice 741 (March 2002) http://customs.hmrc.gov.uk/channelsP...ument#P32_3456 leads me to believe VAT isn't applicable (service is in the schedule of those "mostly intellectual in nature" and client is based outside of EU) but I'd be interested to hear what others think.

For companies in the UK being charged VAT this isn't so much of an issue but for my client, outside of the UK, VAT would just make my services 17% more expensive.

Thanks!

[malvolio]

Hi all.

I'm about to set up a limited company here in the UK to perform IT services (bespoke software development) for a company back in Australia. The work will be carried out 100% in the UK and the Australian company does not have any UK presence or registered office.

Does anybody know if VAT is applicable on the services I render to this client. My reading of Notice 741 (March 2002) http://customs.hmrc.gov.uk/channelsP...ument#P32_3456 leads me to believe VAT isn't applicable (service is in the schedule of those "mostly intellectual in nature" and client is based outside of EU) but I'd be interested to hear what others think.

For companies in the UK being charged VAT this isn't so much of an issue but for my client, outside of the UK, VAT would just make my services 17% more expensive.

Thanks!

Not an expert in this area, but I believe your reading is correct. Phone the VAT people's helpline and ask them - unlike the Revenue, they are both helpful and informed.

[mrbaboo]

Thanks. Will do and will post back the results.

[mrbaboo]

You were right about the VAT people - helpful and informed.

They basically said that the services I was intending to provide fell under Schedule 5 of Notice 741 and by following Diagram 4 (result: customer outside of EC) the services were deemed to be made outside of the EC and thus VAT is not applicable. Huzzah!

Thanks!

[malvolio]

Glad to be of help. Will also file this for future reference!

[expat]

Not an expert in this area, but I believe your reading is correct. Phone the VAT people's helpline and ask them - unlike the Revenue, they are both helpful and informed.

... good plan, since they can sometimes see it slightly differently from your reading, e.g. I once claimed that "provision of email addresses" was electronic and non-localised, and so the point of provision was where I used them and not at the ISP's address. HMRC said, yes, that would be true if the ISP provided the email addresses only; if they also provided storage of the email data, that was localised at their server and was therefore subject to UK VAT.