VAT Terms
HMRC: Her Majesty’s Revenue and Customs
Sales to Countries Outside UK:
- Dispatch: Selling items from UK to countries under the European Union. Generally, Sales under the European Union with VAT registered customers is given a Zero rated VAT. But you can only zero rate when the conditions provided by HMRC are met. Click Here to view the conditions.
- Export: Selling items from UK to countries outside the European Union. Sales is outside the scope of UK VAT, therefore no VAT for this transaction.
Purchases from Countries Outside UK:
- Goods:
- Acquisition: Items purchased from countries under the European Union.
- Import: Items purchased from countries outside the European union.
- Services:
- Reverse Charge: For services which are rendered from countries outside of UK, you may have to account for the VAT yourself. This is called as Reverse Charge. You act as your own supplier and the customer. You charge VAT for yourself and assuming a VAT taxable service you claim it back, therefore the two taxes cancel out and there is no net cost for you.
Services sold to both EU and non EU countries does not come under reverse charge.
Click Here to learn more about reverse charge from HMRC.
Here are some use cases on how reverse charges can be applied.
- Reverse Charge: For services which are rendered from countries outside of UK, you may have to account for the VAT yourself. This is called as Reverse Charge. You act as your own supplier and the customer. You charge VAT for yourself and assuming a VAT taxable service you claim it back, therefore the two taxes cancel out and there is no net cost for you.
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