vat question

[dcw@pr]

i have emailed my accountant, but he appears to be out because I havent received a reply, and I need to get this invoice sent off today. Here is what I sent him,

"Got a quick question for you regarding VAT. We are designing and printing some brochures for a lady, and we are charging her £600 for the printing. As you may know, printing brochures is 0% VAT rated, so we don't pay VAT to the people who print them for us. But do we have to charge VAT on the £600 that our customer pays us, since we are not doing the actual printing?"

thanks in advance if anyone knows the answer

[Davel]

I would have thought that you charge VAT becuase you are providing a service.

Is she in a position to recover the VAT element?

I'm not an accountant so can't comment with any authority.

[dcw@pr]

yes she can recover the VAT. We are charging her VAT on the design services, they are part of a larger design bill, but this £600 invoice is JUST for the printing, so I am unsure.

[Eric Mc]

If she is registered for VAT it is essentially academic whether you charge her VAT or not - as she will be able to recover the VAT on the invoice you provide to her.

Normally, you would be expected to charge VAT for the services you supply to your customers. However, if you are merely passing on a cost - with no VALUE ADDED element (i.e. profit) you could Zero Rate the cost on the basis that it was originally Zero Rated when charged to you by the printer and this is merely a recharge of that cost, rather than the provision of a service by you in the normal course of your normal business activities.

As I said already however, it doesn't really matter whether you charge the VAT in this case as she will be able to recover it.

My basic motto is - if in doubt, charge the VAT.

Edited by Eric Mc on Friday 23 June 15:36

[dcw@pr]

OK that makes sense. Turns out she has just registered for VAT so it's a moot point. Thanks!