VAT Rates

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ob1

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I have been charging VAT at 21% for IT support. I have become aware that all my competitors are charging VAT at 13.5%.

According to revenue, "Computer, Hardware Maintenance / Repair" is charged at 13.5% but "Computer, Software Upgrade / Repair" is charged at 21%.

This really seems to be a grey area, I always assumed maintaining pc and server software (i.e. MS Windows) would come under the software repair at 21%, yet nobody else seems to be charging at this rate.

Can anyone help shed some light on this, when I rang revenue they just point me in the direction of the list of categories on the website.

Thanks
 
The distinction would probably relate to supply of goods/services.

"Maintenance" is generally a repair area (13.5%) but "software upgrade" involves the supply of a new product, therefore 21% VAT.

Perhaps if there is repair or maintenance involved together with the "supply" there should be two different VAT rates applied?
 
My take from "Computer, Software Upgrade / Repair", is that, is the work done in either upgrading or repairing software. For example installing an operating system?

I'm getting our accountant to look into it further, but he seems to think as it's a professional service, it should be 21%
 
Repair of movable goods i.e computer hardware etc would be liable to VAT at 13.5%.

Software upgrades, whether provided by electronic means i.e download or otherwise would be liable to VAT at 21%.

Electronically supplied services (defined in vat law) includes web design, web hosting, software etc is subject to 21%. It sounds like you would fall into this category.
 
Yea, I agree. But what are other companies doing so? In a recent tender, there were five companies including ourselves who quoted, and I was told we were the only one charging VAT at 21%.

What about those other companies, are they all committing VAT fraud? I suppose it would be hard for revenue to catch them, they could always say it was hardware maintenance.
 
ob1 said:
Yea, I agree. But what are other companies doing so? In a recent tender, there were five companies including ourselves who quoted, and I was told we were the only one charging VAT at 21%.

What about those other companies, are they all committing VAT fraud? I suppose it would be hard for revenue to catch them, they could always say it was hardware maintenance.
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...only if the tender/contract was for hardware maintenance.

Btw, have you received professional advice on this?
 
I rang my accountant and he said 21%, but he is looking into it further for me at the moment.
 
Hi Guys,

I have the exact same problem. I have been charging 21% for IT Support services up till now. I'll consult my accountant tomorrow and post the outcome.

Would one of you know what the regulations are in relation to charging VAT to foreign customers with a EU VAT number?

Thanks & Kind Regards,
TMJr
 
TMJr,

if you are exporting goods/services to EU customers that have a valid EU vat number, then you do not charge them VAT.
 
Hi Henry,

Thanks for your reply. Are there any implications with selling the goods to a NI based company but delivering the goods in Dublin?

Thanks for your help.
TMJr
 
TMJr said:
Are there any implications with selling the goods to a NI based company but delivering the goods in Dublin?
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Yes, we come across this quite often. VAT must be charged as the goods are being supplied and delivered within the state. It doesn't matter that the office is NI based. If the customer collects the goods, and an NI delivery address is used on the paperwork, you may be able to invoice NI VAT free though - again, you must quote their valid UK VAT number.
 
There are certain categories of service industrie where the VAT rate is 13.5% basically this applies to those companies which are "labour intensive" this is why you can charge the 13.5%. Hardware means that someone needs to lift and carry and probably go out to the client therefor it is labour intensive.
It the revenue site says 13.5% then charge 13.5% just like your competitors.
 
ob1 said:
I have been charging VAT at 21% for IT support. I have become aware that all my competitors are charging VAT at 13.5%.

According to revenue, "Computer, Hardware Maintenance / Repair" is charged at 13.5% but "Computer, Software Upgrade / Repair" is charged at 21%.

This really seems to be a grey area, I always assumed maintaining pc and server software (i.e. MS Windows) would come under the software repair at 21%, yet nobody else seems to be charging at this rate.

Can anyone help shed some light on this, when I rang revenue they just point me in the direction of the list of categories on the website.

Thanks
Click to expand...

My understanding of this is that if the work is a straight repair to a piece of hardware i.e. no software element and no replacement parts then you charge 13.5%, if there is a software element or the replacement of parts(which are supplied at the higher rate) then the VAT rate is dictated by the percentage of the job which should be charged at either rate.

for example if the job has a hardware repair element which constitutes 10% of the overall bill(with the other 90% being replacement parts or software support) then you charge 21% for the entire job. If the hardware repair element constitutes 80% of the overall bill then you charge at the lower rate of 13.5%. Obviously if the job is entirely hardware repair then the VAT rate is 13.5%. The exact cutoff points for percentage of a job are on the revenue website
 
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