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Baffled by VAT between businesses

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Despite having been working through a VAT-registered limited company since 2007, I'm still clueless about VAT, so I have a question I hope someone may be able to help me clear up.

My company (VAT registered as I say) is doing some copywriting work for another limited company that is not VAT registered. Do I need to charge VAT? I presume I have to because they've bought a service that is subject to VAT under normal circumstances, but I need to be sure.

Thanks.

Comments

  • cid wrote: »
    Despite having been working through a VAT-registered limited company since 2007, I'm still clueless about VAT, so I have a question I hope someone may be able to help me clear up.

    My company (VAT registered as I say) is doing some copywriting work for another limited company that is not VAT registered. Do I need to charge VAT? I presume I have to because they've bought a service that is subject to VAT under normal circumstances, but I need to be sure.

    Thanks.

    I suggest you call the VAT helpline.
    Have your VAT registration number and postcode ready ;).
  • WestonDave
    WestonDave Posts: 5,154 Forumite
    Rampant Recycler
    The only reason you wouldn't charge VAT as a VAT registered company would be if the customer was exempt from VAT which is a very limited number of them (some charities or some overseas companies). If in doubt charge it and let them prove you shouldn't have.
    Adventure before Dementia!
  • Lomast
    Lomast Posts: 872 Forumite
    Part of the Furniture 500 Posts Name Dropper
    You have to charge VAT if its a VATable item regardless of wether or not the customer is VAT registered as long as they are also in the UK i think there are other rules for export in some cases.

    The only difference is that the customer is not able to reclaim the VAT if not registered
  • TheTracker
    TheTracker Posts: 1,223 Forumite
    1,000 Posts Combo Breaker
    In terms of bafflement, this is a good summary of how VAT works as a cumulative tax. For some reason people some people don't get it. I've had clients complain about me adding VAT to expenses that I was recharging them that already had VAT included when I incurred the expense.
  • Post number 4 is the correct one. The only exception would be supplies to EU companies provided their VAT number is quoted on the invoice. In the UK charge VAT if VAT registered and tough luck if the recipient company cannot reclaim it as an input. This frequently happens for example when (say) a VAT registered carpet fitter fits carpets for a property rental company who provides a service outside the scope of VAT
    If you do not charge VAT and should you get inspected the VAT man will assume the total is VAT inclusive and present you with a bill ( less any allowable inputs) e.g £100 bill - £83.33 of this is 'yours' and £16.67 the VAT man's.
  • paddyrg
    paddyrg Posts: 13,543 Forumite
    Yes. In its simplified form, being VAT registered means you charge VAT on everything, but also reclaim VAT on everything, and give the difference to HMRC.

    OK, it is more involved in that some things you pay for don't have VAT on them, train travel for instance, or other marginal cases, but the broad principle stands.
  • cid_2
    cid_2 Posts: 120 Forumite
    Part of the Furniture 10 Posts Combo Breaker
    Yes I figured as much. Thanks everyone, very helpful as ever.
  • IronWolf
    IronWolf Posts: 6,445 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    I presume this limited company is in the UK, if not and it's outside the EU you don't charge VAT.
    Faith, hope, charity, these three; but the greatest of these is charity.
  • TheTracker
    TheTracker Posts: 1,223 Forumite
    1,000 Posts Combo Breaker
    And don't forget to reap the benefit of the Flat Rate Scheme if you qualify. How that perk still exists in these times amazes me, particularly the first year bonus.
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