Q. My company designs websites. If my customer is a business in the Republic of Ireland can I apply zero rate VAT to the sales invoice? Do I need their VAT number before I can do this? Is the situation different if my customer is a private individual?

A. Website design is a service, so the VAT treatment depends on whether your customer is a business or not. You should retain some evidence to prove whether your customer is in business, but you don't need to hold its VAT number if your customer is not VAT registered.

Where your Irish customer is a business, and will use the service you provide for business purposes, the service you are providing is outside the scope of VAT. Your customer must apply the local Irish VAT to what it buys under the reverse charge rules. 'Outside the scope of VAT' means you do not apply VAT to your sale. If your business is VAT registered you will need to ask for its VAT number to report the sale on your EC sales list form. Only sales to VAT registered businesses are reported on that form.

If your Irish customer does not operate as a business, you must apply VAT at UK rates to your invoice, just as if your customer was located in the UK.

Q. My business recently bought an e-book reader from an online retailer. It will be used for business purposes but the retailer is refusing to provide me with a VAT invoice, saying their products are not provided for business purposes, so VAT invoices are not provided to VAT registered customers. How can I get the VAT invoice I need to claim back the VAT charged to my business?

A. If the customer (you) asks for a VAT invoice the supplier must provide one, but in practice you can't force the retailer to comply with the VAT law. As long as you have documentary evidence that VAT was charged - the amount and rate - and evidence that you have tried to obtain a VAT invoice, you can reclaim the VAT charged in your VAT return.

My business is VAT registered but the sales have dropped back, so my turnover is less than £75,000 per year. Can I stop charging VAT on my sales?

A. You must not stop charging VAT until you are given permission to do so by the VAT office. You need to apply to deregister for VAT on form VAT7, and send the completed form to the VAT deregistration office in Grimsby. You must continue to charge VAT on your sales until your application to deregister from VAT is accepted, and this has been confirmed by the VAT office.

I'm going to start selling take-away filled rolls, fizzy drinks and hot pies. Will I have to charge VAT on these items?

Q. My bakery shop is VAT registered, but I don't add VAT to the bread and cakes I sell. I'm going to start selling take-away filled rolls, fizzy drinks and hot pies. Will I have to charge VAT on these items?

A. Most food is zero rated for VAT, which for a VAT registered business such as yours, means you add no VAT to your bakery products but you can reclaim VAT on your business purchases. However, once food is supplied in the course of catering, or as hot food to eat straight away, the standard rate of VAT (20%) may apply. The rules of what must be standard rated and what should be zero rated are quite complicated, and are set out in detail in the VAT notice 701/14: Food. We can advise on what products you should apply standard rate VAT to.

I received a letter asking for a payment of £320 to register the company on the 'Intercom VAT Registry'. Should I pay this fee?

Q. I received a letter yesterday addressed to my new company, asking for a payment of £320 to register the company on the 'Intercom VAT Registry'. Should I pay this fee? Is it compulsory?

A. Do not make any payment or respond to this letter. It is a known scam. The 'Intercom VAT Registry' does not exist and it is not an official EU body as the letter suggests. If you are ever suspicious about letters or emails your business receives, check them against the list of known fraud on the Action Fraud website: http://www.actionfraud.org.uk/. We are more than happy to check any suspicious correspondence you receive, so contact us if you are unsure of the legitimacy of any letters or emails sent to you.

VAT Option to tax – 20 Years are up!



On 1 August 1989 the VAT law was changed to permit property owners to elect for specified buildings to be subject to VAT at the standard rate. This election is known as the "option to tax".

Without activating the option to tax by election, the letting or sale of the building would be exempt from VAT (with some exceptions), so no VAT can be charged on rents, and VAT on maintenance costs cannot be reclaimed. Opting to tax is generally beneficial for commercial landlords, as they can reclaim VAT on their costs, including VAT on the acquisition of the building itself. However, some tenants such as charities and banks, cannot reclaim the VAT charged on the rent, which makes the lease on a a building with a VAT option to tax far less attractive.

The option to tax election can now be revoked if 20 years have passed since the election was made in respect of the building. You could now be in a position to revoke an option to tax you made over 20 years ago. You may want to do this to encourage a wider range of tenants to take on a lease, or to effectively lower the price of the building in this difficult market. Remember Stamp Duty Land Tax (SDLT) is charged on the VAT inclusive cost of a building or lease, so a VAT exempt building means there is less SDLT to pay.

In most cases the revocation does not need HMRC permission if 20 years have passed since the option to tax took effect, and the same person still holds an interest in the building. You just need to complete the HMRC form VAT1614J to inform the Tax Office the option to tax election for a particular building is being revoked. However, you need to check whether the anti-avoidance conditions numbered 3 to 5, on that form are also met. If those conditions are not met you need the permission of the tax Office to revoke the election. If you have any questions about the option to tax election or how to revoke it, please ask us, as it can be very expensive if you get it wrong.