Invoice from UK from individual not charging VAT

D

davidcr

Guest
Hello

If I receive an invoice from a UK based individual to my Irish VAT registered company and the individual does not charge VAT is there any onus or potential liability on my part if it turns out in the future that they should have charged VAT after all.

The situation is I want to pay someone in the UK a share of software development work we did and make sure that I have no other liability other than the invoice

Thanks.
 
It is not a revere charge supply. i.e. supplier does not charge VAT but you self account for VAT as if VAT was chargeable at Irish rate and pay that over to Irish Revenue. Then depending on your business you may able to reclaim some or all of the VAT?

Was the UK individual VAT registered?
 
I have not received the invoice yet. The individual is as far as I know not VAT registered. Suppose I received 6000 euro for work from a third party company and I want to pay 3000 to a partner in the UK who is not VAT registered. If he simply invoices me for 3000 and I transfer that into his account do I have any potential VAT or other tax liability?

If the answer is yes then I will instruct him to invoice me for e.g. 2650

Thanks.
 
Careful!

If you are VAT-registered, you are accountable for VAT on the full amount. Your partner is not liable for VAT in Ireland, and it is his own responsibility to deal with the UK Inland Revenue. If you pay him €3k, you get no VAT credit to offset against your liability. So he should invoice you for half the net of VAT amount, not half of the VAT-inclusive amount.
 
Just to clarify this example - the 6000 I received into the company was for VAT-free invoice I sent to a UK VAT reg company.
 
When you say this UK individual is your partner, they're not actually your partner? Insofar as you and he aren't in a registered partnership, and he is just going to invoice you for his services as one business to another?
 
You are correct it's just a person that wants to get paid.
 
I would contend that a service provided by a non-VAT registered business is NOT a supply of services for VAT purposes, and is therefore outside the scope of VAT.

Consequently the reverse charge mechanism would not apply.

In any event, provided you would normally be entitled to full input credit in respect of such supplies (where VATable), any net liability would be nil, despite perhaps being accounted for incorrectly.
 
So is that a definitive no VAT liability from UK non registered individual or is there a liability as earlier suggested?
 
smeharg said:
I would contend that a service provided by a non-VAT registered business is NOT a supply of services for VAT purposes, and is therefore outside the scope of VAT.

Consequently the reverse charge mechanism would not apply.

In any event, provided you would normally be entitled to full input credit in respect of such supplies (where VATable), any net liability would be nil, despite perhaps being accounted for incorrectly.
Click to expand...

Actually ... I think I'm wrong :eek:

The place of supply is what determines the VAT treatment. The place of supply will be Ireland, as the supply is to a VAT registered business. As such the reverse charge mechanism would apply.

If the UK supplier invoices you for €3000, you put €690 in to the VAT on sales box; and (assuming you are entitled to reclaim VAT on purchases) you put the same amount in the VAT on purchases box. You'll also need to complete the EU acquisitions section.

So if you're entitled to full VAT recovery on purchases, then there will be no Irish liabilty; on the other hand of you're not entitled to full recovery on purchases there will be a liability.

Sorry for the confusion.
 
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