Reverse Charge VAT

[Fourmotion]

I'm hoping someone here is a VAT expert, as I'm having a hard time finding the answer on the HMRC pages. If a company were to de-register for VAT, would it still be liable for reverse charge VAT on foreign supplies?

[Eric Mc]

Explain how things are being handled at the moment.

[Fourmotion]

Currently we use Audit and Actuarial service providers from Bermuda. We reclaim VAT in the UK on small purchases made, but only at 26%. When we pay the foriegn suppliers, we are obliged to assess the transactions for VAT purposes as if we were both the supplier and receiver. It basically means we have to add 17.5% to the cost and pay this over to HMRC (albeit less our 26% which we reclaim as the receiver).

At the moment, due to the cost of the services, we are paying more in reverse charges than we claim back through our UK purchases. Being that the company is in run-off, we don't make any sales, and technically do not report 'Turnover' as such, so I assume we can de-register for VAT without too many issues.