Content
Leading article...
We can't go on like this...
General tax...
The name is Bond
Blessed are the givers
Excuses, excuses
PAYE the penalty
Silver and gold
Moving goalposts
Doctor, doctor...
Something phishy
Pension problems
Tax dot com
Unpleasant discoveries
Fair's fair (at last)
Chartered taxpayers
This year, next year
VAT...
Focus your mind
Flat rates aren't flat
Reverse the charges
Flapjack flash
Ready set ECSL
A lofty idea
Law items...
I want my lawyer
Not on my holiday
A grey area
No difference
| Does anyone reverse the charges on the telephone any more? In VAT, a reverse charge is something quite different - if a UK business buys services in from a foreign supplier, it has to account for VAT as if it both sold and bought the supply. That's to level the playing field - a UK supplier would have to charge UK VAT, so you can't avoid it just by going to someone overseas. If you are a fully taxable trader for VAT, it doesn't matter a great deal because you can recover in Box 4 the figure you put in Box 1 of your return. So on a UK purchase you pay £11,750 to your supplier and claim £1,750 back in Box 4; on a foreign purchase you pay £10,000 to the supplier and put £1,750 in Box 1 and Box 4, netting off to nothing. It matters if you can't recover VAT in full - then Box 1 is bigger than Box 4 and the difference has to be paid to HMRC as a cost. Recently an organisation which helps to defend doctors against negligence claims landed in hot water over this. It used foreign lawyers for some of the cases, but it didn't account for the reverse charge because it thought the doctors themselves were the lawyers' clients - if anyone should be dealing with it, it would be the doctors. When HMRC looked into it, they decided that the organisation engaged the lawyers, and it was liable for £5m in back tax which it couldn't recover. The doctors' premiums may be going up this year as a result. If you buy in services from abroad, and you aren't sure how to deal with them - or if your supplier wants to charge you foreign VAT - we will be happy to advise you.  |
© Bayar Hughes & Co., 2010.