Further to the recent announcement of our comprehensive and extensive new International tax service offering here I thought it a good idea to provide a brief guide on when a business or an adviser needs to consider indirect tax when selling overseas. I hope this summary will be of use. Please contact us if you feel that any issues here are relevant to you or your clients.
International and cross-border transactions can be extremely complex and frustrating (take it from me if you haven’t already experienced it). From the physical movement of goods to the many various types of services, VAT is a minefield. Not only is it very complicated, but different languages, rules and practices can add to the overall issues with dealing with the tax. This shouldn’t be a barrier to companies doing business across the world and we are here to support and assist you.
We are experienced in advising not only on UK indirect tax, but issues in other EC Member States and matters outside the EC.
Do you know whether you have indirect tax responsibilities in other countries? Do you know whether you are taking advantage of all available reliefs?
There are often complex and conflicting issues concerning VAT when dealing with customers or suppliers outside these shores. Although the EC-wide VAT system is supposed to be harmonised, not unsurprisingly, there are significant differences in domestic law and the application of EC legislation. It is easy to get caught out or not even consider VAT issues outside the UK. There are special rules for a lot of activities, with the rules for International Services particularly complex.
Experience insists that overseas tax authorities do not mitigate any assessments and penalties simply because your business is based outside their country. Another twist is that HMRC are simply not interested in any transactions outside the UK so will not assist with taxpayers’ queries.
So what sort of questions should a business be asking itself and in what circumstances could VAT rear its ugly head?
When should I be considering VAT?
- Exporting goods – Do they properly qualify for zero rating?
- Dispatching goods to other EC Member States – Are they UK VAT free?
- Distance Selling (usually online/mail order) – There are special rules for this.
- Selling goods in the UK which are to be removed from the UK.
- Retail sales to visiting customers.
- Electronically supplied services – MOSS
- Imports – what value? Recovery of import VAT. Customs Duties. Procedures. Reliefs.
- Acquisitions from other Member States – what are the rules? Self-supplies. Procedures.
- Provision of services – What is the Place Of Supply (POS)?
- Provision of services – UK VAT, no VAT, overseas VAT chargeable?
- Working abroad – What are the rules?
- Property owned overseas.
- Overseas businesses owning UK property
- Purchasing services overseas – VAT free? Self-supplies
- Purchasing/hiring transport/vehicles cross border; aeroplanes, yachts, road vehicles etc.
- Organising trade fairs, exhibitions seminars or training etc– There are special rules.
- The Performance rules eg; cultural, artistic, sporting – There are special rules.
- Supplies of electronically supplied services – There are special rules. MOSS (Mini One Stop Shop) issues.
- Place of belonging issues. Where do you belong for VAT purposes? Where does your customer belong?
- Intercompany charges/management charges/recharges – Require careful consideration.
- Filing overseas returns and dealing with overseas authorities’ inspections/investigations
- Cross-border transactions in used goods (including works of art and cars) – there are special rules.
- When negotiating contracts or pricing transactions/projects. You need to know the VAT position first otherwise you cannot budget correctly.
How we can help
We can assist whether you have an ad-hoc query or you require a full service in an overseas country. We can:
- Deal with overseas authorities on your behalf
- Resolve disputes with overseas clients/suppliers
- Analyse cross-border/international positions
- Advise on international structures
- Resolve complex international technical problems
- File overseas declarations/returns and registrations
- Deal with HMRC on complex POS matters
- Assist with classification and valuation matters
- Deal with documentation (which can be complex and demanding)
- Review and advise on contracts and tenders
- Liaise with local domestic legal/accountancy advisers in overseas countries
- Advise overseas businesses making supplies into the UK
- Assist with e-services matters including MOSS
- Resolve disputes with HMRC
- Handle claims for VAT incurred overseas for a UK business and UK VAT claims for overseas businesses
- Act as a one-stop shop for all of your overseas tax matters.
So don’t let tax interfere with your business expanding overseas, we are here to help you.