New rules for VAT on sales to the EU came into force on January 1st. I thought I understood them and that they would not really make much difference - the essence being that we need to put the client's VAT number on our invoices and either not charge VAT or put it on the invoice as a sort oif virtual item, which we do not pay to HMRC.
The client then does not pay us the VAT and also of course does not reclaim it from their VAT Authority. This is under wjhat are known as "reverse charge" rules and seems simple and reasonable.
However a colleague has been told by the VAT Enquiries Office that she does have to pay the VAT to our HMRC even though the client does not pay it to us. This means in effect we are being charged a 17.5% tax on exports to the EU!
Surely this cannot be correct? If so why has there not been a large scale protest?
Has anyone any further information on this?
