VAT query (services, from Ireland to UK)

Hello,

I would be very grateful for any insight into my situation. I've recently registered as a sole trader. I provide copywriting services to companies as well as online editing for a magazine (so I invoice the publisher). So far, all of my clients are based in the UK.

I am not yet registered for VAT but I have had to re-consider this as I could end up closer to the threshold than I ever anticipated in 2013 following some good news received this week.

When is the best time to register for VAT? Should I just do it now, or wait till the New Year?

I understand I am providing Fourth Schedule services to the UK, therefore I would be charging 0% VAT and the burden of VAT is on my clients - is that correct?

How does that affect existing clients - clients who would up to now have been receiving non VAT invoices from me - will my services be costing them more when I register for VAT or can they claim some or all of their UK VAT back?

Should I write to them to explain the situation or can I assume they know how to deal with this? How do I explain it to them in the clearest manner?

Apologies if this sounds ignorant but I'm struggling to understand and do the right thing and am a bit terrified of losing business.

I intend on sorting out an accountant but I need my finances to be healthier before I can consider this.

Thanks in advance!!

You should register for vat when your monthly income shows that you are likely to exceed the vat threshold within the next 12 month period.

E.g.
Jan turnover 3, 000 = 36, 000 in a 12 month period - under threshold
Feb turnover 4, 000 = 48, 000 in a 12 month period - over threshold therefore should register for vat (for a service business).

It won't affect existing clients who are vat registered as the can simply reclaim the vat. If you have some clients who are not registered or vat exempt it will increase your cost to them.

UK vat registered customers should self account for the UK vat in their returns. I would imagine they should be aware of the rules.

Thanks!

Thank you Nutso!

So in summary:

Once I register, I start invoicing clients with 0% VAT if they are registered.

And if they are not registered for VAT, then I'd have to invoice with an additional 21% Irish VAT?

Moonycat said:

Thank you Nutso!

So in summary:

Once I register, I start invoicing clients with 0% VAT if they are registered.

And if they are not registered for VAT, then I'd have to invoice with an additional 21% Irish VAT?

Click to expand...

23% VAT (assuming that is the rate applicable to your services).

Right- yep not sure yet about applicable VAT rate but at least the mechanism is slightly clearer to me. Am meeting an accountant this week and I now feel a little less in the dark. Thanks!