VAT rules if supplying a service to USA – help!

Morning,

We’re a small business selling a research/brand service and have won a bit of work with a client with HQ in USA. The work is to be conducted in the UK, and re the UK but the client is American and will be paying from their US HQ.

Do we charge VAT on the invoice or are they exempt?

From the HMRC website, looks like we don’t charge VAT and tred the HMRC helpline but after 15 mins of menus and waiting, gave up.

Anyone here know for sure?

Many thanks!

Correct – you don’t charge VAT. You produce a zero rated invoice and enter it into the relevant box on the VAT return.

Whilst it depends on the precise service but the general principle (and this would apply to consultancy services) is if your service is to a business customer it is made in the customer’s location and therefore if abroad, it is “exported”. VAT is charged at 0%, it is not exempt, this allows you to continue to reclaim any input VAT paid on the expenses that you incur to be in a position to deliver the service.

brilliant, thanks guys. Reassuring!

If you are going to do more overseas, I recommend you talk to UKTI:

http://www.ukti.gov.uk/

With services it’s where the service is used to if it is vatable or not just there location. If your services are been supplied to a UK office who make use of your research then it will be vatable. If the UK office is just for contact and the research is used by the US office then it is exempt.
Contact HMRC or look for VAT reverse charge and services.

Notice 741

I am not an accountant or taxman or tax lawyer, but in my experience of selling consultancy services, we would not charge Vat on services which were entirely sent abroad. Services which were consumed in the UK but the invoicing address happened to be overseas ( as often happens when you have a sales office of an overseas firm) were VATable. Some services eg close protection are VATable in the UK no matter where they are consumed.