VAT on professional training

[elena pil]

Hello! Hope you can help me.

My business is a limited company providing tailor-made training programmes in the UK for professionals from CIS countries. I am pretty much confused about the VAT (We are not registered but will have to soon).
As the company is not an eligible body, but still providing educational services for foreigners, do we have to charge VAT on this programmes or not?

Thank you very much.
Elena

[elena pil]

Could be great if someone can comment on :) my question!

[appyammer]

its the weekend

[3pic]

If you are not an eligible body then education of any kind is standrd rated.

Being a Limited company means there are shareholders who can distribute profit in the form of dividends and so you don't qualify for elible ody status.

So your training will most likely be standard rated......but you stated you provide training to foreigners.....so is that training provided in the UK or somewhere else in the UK and if you do provide only in the UK - are your customers individuals or are they registered traders?.

[elena pil]

Thank you so much for the reply!!!!!!

We provide our professional training to foreigners around the world (some programmes are in the UK).
The clients are mainly individuals, some are governmental bodies (like schools, hospitals, universities, etc) some are private companies.
All of them are based in CIS countries.

[3pic]

Under the Place of Supply of Services rules (from 01 January 2010), the place of supply of educational services is where they are performed.

Therefore, where you make sales outside of the UK, these are not included in your VAT registration threshold calculation. The same goes for distance sedlling sales as well. Distance selling is when you sell to individuals (not businesses) inon-UK countries. If you have such customers in the EU, then depending upon which EU member state you are selling into, you may have a liability to register for VAT in that EU member state.

You say your sales are mainly to CIS countries, if you mean "Commonwealth of Independent States", then these are usually ex-Soviet bloc type countries (Kazakstan, Uzbekistan, etc). If that is the case, these are outside of the EU and so your sales to them will be outside the scope of UK and EU VAT and will not count towards your VAT registration threshold.

From 01 January 2011, the default rule will apply to educational services meaning that the place of supply is where the customer is located (which may be different to where the service is performed, as per the current rule. So if you perform a service in Uzbekistan but on behalf of say Texaco based in France, then that may mean you are making a sale in the EU, even though you are performing outside of the EU - but that's next year!)

[elena pil]

Thank you for such a detailed explanation!!!!

By CIS I do mean post-Soviet block of counties.

So as far as I understand under the currect rules where ever we perform our educational services (Uk or other countries) we do not need to charge VAT on them as long as the clients (individuals and business) are located outside the EU.
The same will apply with the new rule too as long as the clients are based outside the EU (even if the services for him are perfromed in the UK).
Please correct me if I am wrong.

We are confused whether we should register for VAT or not (we have not reached VAT threshold yet) as we do not want to add VAT on our services for outside the UK based clients but would like to claim VAT back on BT bills, equipment, hotels, etc.

Kindly responce.

[3pic]

Thank you for such a detailed explanation!!!!

By CIS I do mean post-Soviet block of counties.

So as far as I understand under the currect rules where ever we perform our educational services (Uk or other countries) we do not need to charge VAT on them as long as the clients (individuals and business) are located outside the EU.
The same will apply with the new rule too as long as the clients are based outside the EU (even if the services for him are perfromed in the UK).
Please correct me if I am wrong.

We are confused whether we should register for VAT or not (we have not reached VAT threshold yet) as we do not want to add VAT on our services for outside the UK based clients but would like to claim VAT back on BT bills, equipment, hotels, etc.

Kindly responce.

Where you perform training in the UK, that will be subject to UK VAT. Where you perform it in Uzbekistan, then that is outside the scope of VAT. Where you perform in the EU, that too is outside the scope of UK VAT. Next year, whereever the customer is located takes priority.

You could volunatrily (as you are below the £68k threshold) register for VAT which means you charge your UK customers VAT, but you don't have to charge VAT to the EU/non-EU customers. So have a look at where all your income comes from, if only a few from the UK it may be worth charging those customers VAT at the expense of not having to charge all the other customers but then you'd be able to reclaim input tax on your running costs, even though the greater proportion of your income is overseas.

[elena pil]

100% of our sales income is coming from CIS countries.
Will we be able to register for VAT then?

[yorkshirejames]

100% of our sales income is coming from CIS countries.
Will we be able to register for VAT then?

Yes, you will be able to voluntarily register for UK VAT.

You need to consider also whether you have any reporting obligations in these CIS countries also.

[elena pil]

What kind of reporting obligations?

[yorkshirejames]

What kind of reporting obligations?

I do not know, as I am not an expert in those jurisdictions. Is your course delivered solely online, or do you do classroom sessions?

[elena pil]

The training we provide is mainly training by professionals & exparience exchange. So if it is in the UK it will be some training classes, forums, etc.

[yorkshirejames]

The training we provide is mainly training by professionals & exparience exchange. So if it is in the UK it will be some training classes, forums, etc.

and if in Kazachstan?

[elena pil]

We do our programmes for CIS participants, they are being held usually in the UK, Europe, UAE, China, etc.

[elena pil]

Just would like to re-confirm:
Even if we organise our professional training programmes in the UK but for CIS participants we do not need charge VAT on our sales invoices for them once we register for it.....
And the same will apply when the rules for educational programmes will change next year....

Thank you :)

[elena pil]

Please, please, please professionals..... Confirm whether I am right or wrong :)

[rozermored]

There was a time when governments realised the value of educating people to join workforce, and consequently help the country to trade more profitably. But when New Labour, took control, one of their changes was to add VAT to the previously exempt cost of training.You won't have to pay too much as you can use the cost of your PC, broadband, hosts and domain renewal etc. to offset against the tax.

[spidersong]

There was a time when governments realised the value of educating people to join workforce, and consequently help the country to trade more profitably. But when New Labour, took control, one of their changes was to add VAT to the previously exempt cost of training.You won't have to pay too much as you can use the cost of your PC, broadband, hosts and domain renewal etc. to offset against the tax.

Crickey! New Labour have been around longer than I thought, since VAT law on training has been in place almost unchanged since 1983, and before that it was a bit simpler exempting all training of a kind provided by schools, or when done by charities. So training's been taxable since VAT came in unless most businesses were getting their training from charities or direct from local schools back in the 70's.

So you heard it here first folks: Ted Heath, and Maggie Thatcher; both staunch New Labour primeministers!