Is vat chargable to an American Resident for preparing a UK Tax Return?
“I am billing an individual client, now resident in the USA, for preparation of a UK tax return. During most of the period covered by the tax return the person was resident in the UK, and when they emigrated they kept me on as their accountant here. But I am not sure whether or not I should now be charging them VAT.”
It is the nature of the service carried out together with the status of the customer that determines whether the service is treated as supplied in the UK, and therefore within the scope of UK VAT, or supplied elsewhere and outside the scope of UK VAT. This should be considered at the time the supply is made. For continuous supplies, such as accountancy services, the time of supply would be the earlier of the issue of a VAT invoice or receipt of payment, and for a one-off supply would be the date of completion unless a VAT invoice has been issued or a payment received sooner.
The main supplies made by an accountant, such as accounting, audit, taxation and other advisory services fall under the general rule governing place of supply. This means that for business-to-business supplies, ‘B2B’, the place of supply will be where the customer belongs, and for non-business customers ‘B2C’ the place of supply is where the supplier belongs.
That would lead us to conclude that UK VAT is due. However, there is a further provision for accountancy services and other services of a professional or intangible nature when supplied B2C. These services are listed in VATA 1994, Schedule 4A paragraph 16, and further detail is set out in section 12 of VAT Notice 741A: Place of supply of services. Where these services are supplied to a customer resident outside the EU the supply is treated as being made in the country in which the customer resides.
As your client was resident outside the EU at the time when the supply was made and assuming they haven’t created an earlier time of supply by paying before they left the UK, then your supply is outside the scope of UK VAT.