VAT on Electronic Services

[André]

Hello, I'm just starting up, and while I don't think my proposed line of business is drastically new or different (it's a Property Website) I'm finding it surprisingly difficult to find out how VAT applies to the service I'm offering!

Essentially, the website will charge landlords (private and commercial) to advertise their property online via my website and subsequently communicate with potential buyers/tenants etc. My customers will (hopefully!) be from the UK, within the EU and outside the EU.

The question is, how much VAT do I charge, and what does it depend on? I can't be the only one wanting to provide an electronic service to international customers, so I'm hoping that there is a definitive (and readable) guide on the subject - perhaps there are even electronic payments systems which work it all out for you during the online payment process?

Has anyone else already jumped through this hoop? I'd appreciate any help!

 

[Pilfo]

First and foremost, you have to be VAT registered yourself, in order to be able to charge potential customers VAT.

Within the UK the normal 17.5% will be charged. Although different countries within and outside the EU have their own varying VAT rates, you still charge your customers the same 17.5%.

However. it would be prudent to check with HM Customs & Excise http://www.hmce.gov.uk

You will also have to keep certain records and accounts if you make supplies to businesses in other EC states (ask for Notice 725 The Single Market). You can also find further information about Intrastat in Notice 60 Intrastat General Guide.

Pilfo

 

[Julie]

Hi André

The VAT Office have an online page in the FAQs:

FAQ: Trading on the Internet.

You should be able to get there by following this link:

http://customs.hmrc.gov.uk/channels...tyType=document&columns=1&id=HMCE_PROD_007408

If this link doesn't work, got to www.hmce.gov.uk, click on 'VAT' in the 'Business and corporations' red box, then click on 'FAQs' in the left-hand panel. You'll see it listed.

Either that, or you could call their helpline on 0845 010 9000 -- they can give you a specific answer to your query.

Julie

 

[Ozzy]

I had this issue myself for company formation services being provided to other countries. I discussed it with HMR&C and also recorded the call incase of any future problems.

I was advised over the phone the following;
If I provide the service electronically via email and my website and the country is not in the EC for VAT purposes then the transaction is excempt. If the country making the purchase from me is in the EC for VAT purposes and I have their VAT number and display their VAT number on my invoice then I do not charge VAT on the transaction. If neither of the above apply then I charge VAT.
This is a very subjective area, and I know Alpha questions the advice I was given by HMR&C which I way I have stored an archive of the recording of then telephone conversation just incase they question me in the future.

My advice is speak to HMR&C and get their advice on your specific case, and if possible get them to confirm their advice in writing (ha ha - nice one, I laugh at my own jokes), so try and record the call if you can.

 

[André]

Thanks for all the suggestions Looks like I have some homework to do!