Reply To: how to correct invoice when reverse charge notice was omitted? How big a deal?

Forum Categories INTERNATIONAL VAT ON CROSS-BORDER TRANSACTIONS how to correct invoice when reverse charge notice was omitted? How big a deal? Reply To: how to correct invoice when reverse charge notice was omitted? How big a deal?

#56019
VAT-adviser
Member

The VAT rules are that place of taxation (for VAT purposes) is determined by (i) where the services are supplied and (ii) status of the customer receiving the service i.e. whether a business or consumer.

The place of supply for business to business transactions (B2B) is the place where the business customer ‘belongs’. Hence services to EU businesses, the place of supply is where the business customer ‘belongs’, hence VAT should not be charged to all EU businesses.

The place of supply for business to consumer transactions (B2C) is the place where the supplier ‘belongs’ irrespective of the location of their customer. Hence the place of supply for services to EU customers is UK and VAT should be applied regardless of the location of the customer. Please note B2B (Business-to-business) means commercial transactions between businesses and B2C (business-to-consumer) means transactions between a business to natural persons/private individuals. Also note services to EU businesses that are not VAT registered are counted as a consumer.

There are range of suggested wording to be included on your invoice including your vat number, customer vat number. You can annotate the invoice, ‘reverse charge supply,’ or if you want to be more legal-sounding, you refer to the EC VAT Directive 2006/112/EC. 

In your case you may simply reissue the invoices and issue credit notes; and explain to customers.