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Value Added Tax (VAT) Registration

Registration in the UK

You must register in the following circumstances:-

1. At the end of the month if the value of taxable supplies in the past twelve months has exceeded the annual threshold.
2. At any time if there are reasonable grounds for believing that the value of taxable supplies in the next 30 days will exceed the annual threshold.

Please remember that HMRC can levy automatic penalties for failure to register and for the late submission of Returns. Will you please remember to keep photocopies of your quarterly VAT returns.

If your turnover does not exceed the registration limits it may still be to your advantage to register voluntarily if the majority of your clients are themselves registered for VAT as you will be repaid all your input tax.

Please note that taxable supplies for UK registration purposes exclude engagements in other E.U. countries.

If you provide your services direct to a customer (B2C) (see below) you may need to register separately for VAT in each of those E.U. countries where the income from your engagements in each of those countries exceeds those E.U. country’ VAT registration thresholds (but see below regarding the reverse charge mechanism).

Registration in other EU Country

(Terms used – Business to Business – “B2B” – Business to Consumer – “B2C”)

From the 1st January 2011 the place of supply rules change for Entertainers and Musicians. Up to the 31st December 2010 it was “where the performance takes place” which meant any performance outside the U.K. would be outside the scope of UK VAT. The new rules will be covered by the provisions of “where the customer belongs” when you are supplying your services to another business (B2B). The old rules will still apply where you are supplying your services to a private consumer (B2C).

Under the new rules where your customer belongs in the UK e.g. your overseas services are supplied to a U.K. company means that although you perform overseas and you are VAT registered you must prepare a VAT invoice for your UK customer (the UK company). Under the new rules for (B2B) services, if the supply is to an overseas customer you will not need to register in the country where you are performing as the supply will be dealt with under the reverse charge system – your customer will record both the sale and purchase on their VAT return together with the input and output VAT.

You will need to detail on your invoice that the supply is within the reverse charge mechanism and state the VAT number of your customer. This supply will be outside the scope of UK VAT but must be included and reported on your quarterly EC sales list and VAT return to HMRC from 1st January 2011. You do, however, need to add the sale to box 7 on your VAT return (sales and other inputs).

If your services to an overseas private consumer (B2C) is above that country’s VAT registration threshold then you may be required to register for VAT in that E.U. country. If you have no business establishment in that E.U. country where you are performing it may be necessary to appoint a fiscal representative to register for VAT on your behalf. This could be a costly process as the representative would be jointly and severally liable for any VAT debts and would probably require an advanced payment or bond from you to cover any such liability. It is therefore advantageous to try to avoid registration wherever possible.

It is possible in most E.U. countries to arrange for the obligation to account for VAT to be shifted to the recipient of your services. In most cases this would be the local promoter who will already be registered for VAT in his own country. If the tax shift is allowable in that country, the promoter can declare VAT on the services that you provide and therefore overcome the problem of you having to register for VAT in that country.

Click here Guide to VAT registration.

Click here Guide to cash accounting scheme.

Click here Guide to flat rate scheme.

This material provides only an overview of the regulations in force and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm.

ACTION

Click here to email Tim Dauncey for further information or if you would like to ask him a question.