Zero rated VAT on supply of services to company in Ireland

[ShandyDrinker]

My company is looking to providing ad-hoc software development services to a company in Ireland alongside my day to day contracting activities based in the UK. Although I have worked in Ireland previously, it was clear-cut then that I would invoice on a zero rated basis as the services would be supplied in Ireland.

On this occasion the services will be supplied in the UK with the end customer being in Ireland. From the guidance on the HMRC website it would appear that the place of supply would be in Ireland, hence zero rated.

Does anyone else have any experience of this and is my interpretation of the above correct?

I did check with my accountant but the guidance I was given is that the invoices should have VAT charged as if the place of supply was the UK.

Also, would there be any impact if the (UK) company were on the flat rate scheme?

Thanks in advance for any responses.

[TheCyclingProgrammer]

YIf the client is an Irish company and they have no presence in the UK, the fact you are supplying your services from the UK doesn't matter - for B2B services the place of supply is generally where the client is, so Ireland. There can be exceptions but none that are likely to apply in your situation.

The supply is not zero rated, it's outside the scope of UK VAT. No VAT is charged and your invoice does not need to include any VAT line. It should state that the client is to deal with the VAT at their end under the reverse charge.

The distinction between outside the scope and zero rated is important. The former is not included in your turnover when calculating your flat rate VAT - it doesn't even get included in your VAT return - but the latter is.

I'm surprised at your accountants advice. The general rule for the place of supply of services is pretty simple.

Edit: you will probably also have to submit a an EU sales list to HMRC. This information is needed to make sure the Irish company is correctly applying the reverse charge.

[ShandyDrinker]

If the client is an Irish company and they have no presence in the UK, the fact you are supplying your services from the UK doesn't matter - for B2B services the place of supply is generally where the client is, so Ireland. There can be exceptions but none that are likely to apply in your situation.

That was my thought after reading the guidance on the HMRC site...

The supply is not zero rated, it's outside the scope of UK VAT. No VAT is charged and your invoice does not need to include any VAT line. It should state that the client is to deal with the VAT at their end under the reverse charge.

The distinction between outside the scope and zero rated is important. The former is not included in your turnover when calculating your flat rate VAT - it doesn't even get included in your VAT return - but the latter is.

I'm surprised at your accountants advice. The general rule for the place of supply of services is pretty simple.

Edit: you will probably also have to submit a an EU sales list to HMRC. This information is needed to make sure the Irish company is correctly applying the reverse charge.

Agreed re zero rated versus scope. Poorly defined on my part. When working in Ireland previously I had to complete an EC sales list and as it appears that the place of supply of services will be Ireland fully expect to have to complete one again for the reverse charge.

I'll be clarifying with the accountant today.

Thanks for the helpful reply.