Reverse Charge VAT

M

mickob21

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Hi,

I have a normal PAYE job but I'm starting to do some consultancy work on the side. I've set up my own company for this and I'm in the process for registering for VAT. The company that I will be doing for the work for are based in the UK. They have advised that I don't charge them VAT and instead do a reverse charge for VAT when I invoice them. I don't understand how this works. Do I pay the VAT? If so, am I losing out on 23% of my hourly rate?

Thanks,
Mick.
 
In plain English you do your return by noting the vat element as a part of your sales revenue and at the same time taking it to jour cost of sales as a cost. Therefore you both declare it and claim it in the one return, one cancelling out the other.
 
Westgolf said:
In plain English you do your return by noting the vat element as a part of your sales revenue and at the same time taking it to jour cost of sales as a cost. Therefore you both declare it and claim it in the one return, one cancelling out the other.
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I think you have this backwards. The OP is invoicing a customer in the UK so he will charge no VAT and the UK company will charge themselves UK VAT on their VAT return in the UK.
 
Ciru75 said:
I think you have this backwards. The OP is invoicing a customer in the UK so he will charge no VAT and the UK company will charge themselves UK VAT on their VAT return in the UK.
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Good call Ciru75, didn't spot that.
 
OP. When invoicing the UK company, make sure to quote their VAT registration number on your invoice.

This is what entitles you to zero rate your invoice.
 
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