Question asked by Roger Moore 11 years ago
If an employee of a UK Vat registered business takes a trip to France and incurs subsistence costs at a hotel in Paris, what is the correct Vat treatment and rate to use to record this?
Hi Roger
This is a very complex area and, as it happens, Abdul's suggestion may not always work.
Just to clarify "reverse charge"; if EU companies transact services across an EU border, eg you (in the UK) buy a service from a company in Ireland, the services is deemed to have taken place in the customer's country and so, there should be no foreign VAT charged and, as the supplier is unlikely to be UK VAT registered, it will not charge UK VAT either. So, to kick off the UK's VAT trail on the service, the buyer (you) records both a Sale and Purchase in your UK VAT return, as described by Abdul above .
In the circumstances you describe however, the supply is actually taking place in France and, almost certainly, you'll have suffered French VAT and so this is not a reverse charge situation. Instead, I'm pretty sure it is outside the scope of UK VAT and so not recorded on the return. You may however be entitled to make a reclaim of the French VAT directly from the French VAT authorities.
More details are on HMRC's website: http://www.hmrc.gov.uk/vat/managing/international/overseas-traders.htm
Please note that as Clear Books is not authorised to to give direct tax advice the above is my personal opinion as an accountant and so you should always double check the entries with your accountant or HMRC.
Hope that helps Paul
Best answerHi Roger,
What I can suggest is that this can be treated as a 'Service from EU Supplier' and the VAT rate would be 0%. Doing this would cause the expense to be under Box 1 and 4 and will also automatically apply the Reverse Charge.
Kind Regards,
Hi Abdul - thanks for the response and this kind of confirms the approach I was adopting. However...... When a service is delivered in another EC country the cost includes their VAT at whatever rate. The reverse charge (B2B) general rule does not apply because the supply takes place in the other country (i.e. it is not the delivery of a service in the UK from another EC country). There are firms that offer to recover the Vat suffered in these circumstances but it is a complex and expensive area and not justifiable for most small businesses. Secondly I believe there is a bug in the CB Vat return for a client of mine whereby his June 2014 quarter end Vat return somehow includes EC expenses from 2013 - even though old invoices were not ticked and the date range was 1/4/14-30/6/14.
Hi Roger,
Perhaps you could send in the problem you are facing via a ticket so that a support agent can have a look into it. Regarding the VAT you pay in another country there is a helpful guide here on the HMRC website about how you can recover it; http://www.hmrc.gov.uk/vat/managing/international/overseas-traders.htm
Kind Regards,
Hi Roger
This is a very complex area and, as it happens, Abdul's suggestion may not always work.
Just to clarify "reverse charge"; if EU companies transact services across an EU border, eg you (in the UK) buy a service from a company in Ireland, the services is deemed to have taken place in the customer's country and so, there should be no foreign VAT charged and, as the supplier is unlikely to be UK VAT registered, it will not charge UK VAT either. So, to kick off the UK's VAT trail on the service, the buyer (you) records both a Sale and Purchase in your UK VAT return, as described by Abdul above .
In the circumstances you describe however, the supply is actually taking place in France and, almost certainly, you'll have suffered French VAT and so this is not a reverse charge situation. Instead, I'm pretty sure it is outside the scope of UK VAT and so not recorded on the return. You may however be entitled to make a reclaim of the French VAT directly from the French VAT authorities.
More details are on HMRC's website: http://www.hmrc.gov.uk/vat/managing/international/overseas-traders.htm
Please note that as Clear Books is not authorised to to give direct tax advice the above is my personal opinion as an accountant and so you should always double check the entries with your accountant or HMRC.
Hope that helps Paul
Best answerApologies to you both, when I responded neither of your most recent comments appeared on the page, and from your initial question Roger I had assumed you were not an accountant.
Best Paul
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