# Contracting as LTD company and VAT issue



## mariuszp (22 Jan 2012)

Hello,
I recently started contracting for a big company which is allowed to deal only with other companies and not with individuals or employees.
I was asked to setup my own LTD company or go for umbrella company.
I decided to setup my own LTD company and we agreed on the contract daily rate.
Also, we have exchanged our VAT numbers and the I started my work.
After my first month I issued my first invoice of a sum of days + 23% of VAT.
The invoice was accepted but the client has paid only NET amount. 
My VAT figure was completely ignored.
I have re-issued my invoice and pointed out that the VAT value have not been paid but the accounting team remains silent...

I went through the contract and there is not even a word mentioned about VAT
Daily rate value doesn't say anything if it includes VAT or does not.

Could someone tell me why the client would not pay the VAT amount?


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## mandelbrot (22 Jan 2012)

Is this company a large multinational who would primarily be exporting from Ireland? If so they may hold a VAT 13B authorisation, which allows them to receive goods and services at zero rate of VAT... http://www.revenue.ie/en/tax/vat/leaflets/zero-rating.html


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## podowd (23 Jan 2012)

Hi Mariuszp

If they hold a VAT 13B authorisation they are obliged to provide you with a copy, and you must quote the authorisation number on your invoices. 

Is your client an Irish company? I have encountered this situation a few times with  clients, but only when they are invoicing non-Irish companies and the accounts department of that company assumes it should be zero-rated as it is from a "foreign" company. 

We provide accountancy services to contractors so please feel free to send me a direct message if you need any assistance dealing with it.

Regards

Podowd
www.prima.ie


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## mariuszp (24 Jan 2012)

Hmm,
It is an english company actually. 
So they have a british GBxxx vat number. I would be considered as foreign to them indeed.

So I will have to request a VAT form13B from them and I will cease to charge them vat. 

My returns will just reflect the figures without them payments as they would not appear, is that right ?


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## smeharg (24 Jan 2012)

mariuszp said:


> Hmm,
> It is an english company actually.
> So they have a british GBxxx vat number. I would be considered as foreign to them indeed.
> 
> ...


 
The VAT13B regime is for Irish businesses.

The general rule for the supply of service to a VAT registered business in another EU country is you charge 0% VAT provided certain conditions are met.  However, there are notable exceptions to this general rule.

The VAT treatment can depend on the what the actual service is and where it is performed.

If you discover you have charged VAT incorrectly, you will need to issue a credit note to cancel the original invoice.  You then issue a new invoice with the correct rate.

Your accountant should be advising you on this.


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## mandelbrot (24 Jan 2012)

smeharg said:


> The VAT13B regime is for Irish businesses.
> 
> The general rule for the supply of service to a VAT registered business in another EU country is you charge 0% VAT provided certain conditions are met. However, there are notable exceptions to this general rule.
> 
> ...


 
+1

OP, I only suggested the VAT 13B as it would explain why an Irish company would believe they had no obligation to pay VAT in relation to your supplies.

As Smeharg says, the rules vary depending on what type of service you are providing and where you are deemed to be providing it, so you should get proper advice on this.


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## Gekko (24 Jan 2012)

It's likely that your invoice should have been zero rated.

What sort of services do you provide?


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## wheeler (25 Jan 2012)

Sorry to hijack this thread but what are the exceptions?

If providing IT services to a UK company, invoicing that UK company and carrying out that work in their UK office - then is VAT applicable?
If providing IT services to a UK company, invoicing that UK company but providing these services two weeks of every month in their UK office and two weeks in their DUBLIN office - then is VAT applicable?

BTW - its an American multinational but invoicing is going to their UK entity.


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## smeharg (25 Jan 2012)

mandelbrot said:


> ...
> the rules vary depending on what type of service you are providing and where you are deemed to be providing it, so you should get proper advice on this.


 


wheeler said:


> Sorry to hijack this thread but what are the exceptions?
> 
> If providing IT services to a UK company, invoicing that UK company and carrying out that work in their UK office - then is VAT applicable?
> If providing IT services to a UK company, invoicing that UK company but providing these services two weeks of every month in their UK office and two weeks in their DUBLIN office - then is VAT applicable?
> ...


 
It's not a question of whether VAT is applicable or not. It is a question of where the VAT is applicable and what the correct rate is (standard or 0%).

Where the work is being physically performed may not necessarily be the place of supply for VAT purposes. 

You need to get proper professional advice to ensure you are invoicing correctly.


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## NumbrCrunchr (26 Jan 2012)

See the attached which is a good summary on the place of supply rules:

http://www.revenue.ie/en/tax/vat/leaflets/place-of-supply-of-services.html

Generally:
B2B supplies from Ireland to EU VAT registered - No VAT (The recipient customer accounts for VAT) - This seems to be the OP's situation. You should credit or re-invoice without the VAT element - 13B is not relevant.

It seems that the same rule applies to the thread hijacker.

However this is a general rule posted on a free forum and there may be specific circumstances relating to your situation which you should get professional advice on. 

NumberCruncher


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