VQOTW: VAT Registration for Overseas Run Company

Q. My client has set up a new UK company to supply business consultancy services; however, the company will have no UK trading presence.  My client lives in France and will run the business from his office there.  Most of the customers will be in the UK as my client has a number of contacts here through his former roles.  As my client will be visiting his customers in the UK frequently and will often stay for a few days in hotels can the company VAT register to recover the UK VAT it incurs?

A. If the company has no business establishment or fixed establishment in the UK but has an establishment elsewhere, the supplies would be made from that establishment; in this case, France.  In this situation, as the services are being received by the UK customer from a supplier belonging outside the UK the customer is deemed to be making those supplies under VATA1994 section 8 and would account for them using the reverse charge mechanism.  As a result, your client would be making no taxable supplies in the UK and consequently would not be entitled to register.

If the company is VAT registered in France it would be entitled to use the EU refund scheme to recover UK VAT incurred when here on business.  The relevant VAT notice is Notice 723A.

If you have a VAT query why not contact the VAT Advice Line on 0844 892 2470 to discuss the implications. Our team of experts have a wealth of experience and can also provide a written consultancy service at £180 per hour plus VAT.

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