VAT for Consultancy and training services

[Ferhan]

Hi there,

I am looking after one of my clients books and I need some advice regarding consultancy services they provide to a UK based company but work is carried out in the Middle East on behalf of their client. (Basicly, My client takes its customers products to Middle East and finds distributers, makes contracts onbehalf of them and against this service they charge them for the service they provide).

I know if the client who they provide consultancy services were based in the Middle East, they would not need to charge VAT but this is a bit more complicated situation because although the service was carried out in the Middle East, the important point is that the client they need to invoice is based in UK.

By the way they are both VAT registered.

Thanks

 

[AndyP]

OK....but what's the question?

 

[Ferhan]

Hi Andy,

Apologies about not making the question clear.

My question is, should my client charge VAT to their client (who are based in the UK) for providing consultancy services which were carried out in the middle east?

Thank you.

 

[David Richards]

My question is, should my client charge VAT to their client (who are based in the UK) for providing consultancy services which were carried out in the middle east?

Whether or not VAT is charged depends on the deemed 'place of supply' of the service. Since January 2010 the default place of supply is 'where the customer belongs'. However, there are many exceptions to this general rule and additional changes will take effect from January 2011.

The rules are quite complex, so it's difficult to give a straight answer. VAT Notice 741A gives guidance on working out the correct place of supply, so that's a good place to start.

Alternatively you might get more joy if you ask the question in the accounts forum.

 

[Ferhan]

Many thanks for the useful advice David. I will check the link you have forwarded to me.