VAT Question: When customers are in another country?

[[AJ]]

We are about to expand into Australia and New Zealand. We will be providing a service and creating reports for customers there. Our customers will be able to pay in both Australian and New Zealand dollars, but the service will be carried out here in the UK. Do we need to charge VAT to our customers? Do we charge the UK VAT rate (17.5%), the local VAT rate (10% AU and 12.5% NZ) or nothing at all?

Any advice would be great!

[dcw@pr]

nothing

i think

[Eliminator]

If you supply your service to a foreign business it is for them to reverse charge themselves local VAT which they then claim back in the usual way.

[sgrimshaw]

You should check with HMCE.

It will all depend on what you "sell".

If you sell the end report, written here then arguably you are exporting the report. It would depend on delivery method - "point of supply" is the key issue. There would need to be evidence of export, but if this was the case then the supply would be treated as an Export i.e. Zero Rated.

However, if you sell the service of writing reports (which is what your original post actually says), performed here in the UK then the point of supply is going to be the UK and UK Vat should be applied.

Remember also that if VAT does apply and you invoice in AUD or NZD then special rules regarding exchange rates and converting the amounts back to GBP apply.

From your original post, my money's on VATable supply.

Simon

[[AJ]]

Thanks for the comments so far. I guess we'll give HMCE a call then. These things are never as simple as you hope are they?!

[sgrimshaw]

Don't forget to update the thread with the outcome of the HMCE call, it'll be useful for others who find this thread by searching.

[Eric Mc]

When providing "services", the place of supply of service is the key factor in deciding whether VAT should be charged or not - irrespective as to where the customer is based.

By the way, HMCE no longer exists as such as it is all part of HMRC these days.

[sgrimshaw]

In this case, a clarification as to actually what is being supplied is required.

Is it a service - i.e. the act of writing the report; or

Is it goods - i.e. the report itself.

If the OP develops a report on his own system, then packages it up (electronically or physically) and sends it to the customer as a finished product then that presumeably that would be "goods", most likely Zero Rated Export.

If he does the work on the customers system, then presumeably it will be "services", work performed in UK, therefore a UK Taxable Supply.

It doesn't really matter to the OP, but it does have an impact on the Customer if they are not UK VAT registered.