A client in Dubai who has not paid the vat on our bill

[Anonymous]

Hi
Can somebody answer a question which I am unsure about?

Our client, who is a Dubai based company, has not paid the vat on our bill. We carried our legal services work for them.

Thanks

[Marie Stein]

Hi Lucy

Certain services supplied to overseas customers are “outside the scope” of UK VAT, which means that you don’t charge VAT. These normally include professional type services, such as legal services, so it’s possible that you didn’t need to charge VAT.

Obviously it depends on the specific circumstances of your situation and the “Place of Supply of Services” (“POSS”) rules to see if your services would be covered. The POSS rules define how VAT is applied to international services. They are complicated, but you could have a look at my very brief introduction to the subject here https://vatexchange.co.uk/node/325 which explains how the general rule works in principle.

The detailed rules are explained in the HMRC VAT Notice 741: Place of Supply of Services. Section 15 of the notice lists the types of services that are covered by the general rule. Section 15.5 here http://tinyurl.com/4avgjxw lists various professional services which include legal services and this may cover your situation.

Marie
31 January 2011

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