Q:
Free lancer based in UK and a company based in France
I am a free lancer, taxable person in UK and i offer consultancy services to a company in France. The company is not registered in VIES but they assure me that they have a valid (legal) VAT number and they will register in VIES as well in due time. Thus, there is no doubt that they are a taxable legal person and i proceed by issuing zero-VAT invoices before they register to VIES. Obviously, the legal requirement is that both sides have a valid VAT number but the company in France missed to register it self in VIES on time. Have i done right or i shouldn’t issued invoices as they are not found in VIES?
Free lancer based in France and a company based in UK
I am a company, taxable person in UK and i receive consultancy services from a free lancer, taxable person in in France. My company is registered for tax purposes in UK and operates legally, however i missed to register the company in VIES on time. Thus, there is no doubt that we both are a taxable legal persons and because i didn’t have the time to wait for the registration in VIES to complete i proceed by asking the free lancer to issue zero-VAT invoices before i register to VIES. What are the consequences? I suppose i do have to pay a fine for this delay in registering in VIES (while i have started the intra-community transactions), but do i have to do something more (for example to pay VAT to someone, to change the invoices etc)?
A:
Not sure who I’m talking to here as there seem to be questions about 2 different sides to the same issue……but as both seem to be about the fact that the VIES system and what to do if you’re waiting for the registration to show up in VIES, here’s some information that might help.
In VAT Notice 725: The Single Market (which deals mainly in matters relating to supplies of goods, but some of the information also applies to services, such as the VIES), HMRC says the following:
If you are uncertain whether the number you have been given is valid you should make sure it follows the format at paragraph 16.17. As a preliminary check the validity of a customer’s number can be confirmed via the Europa website.
All Member States share these arrangements and businesses in other Member States can verify a UK VAT registration number in the same way.
From 1 January 2010 Europa will also provide name and address details for valid UK VAT registration numbers. Additionally, if when making an enquiry you identify yourself by entering your own VAT registration number, you will be able to print out a validation record of the date and time that the enquiry was made and confirmed. If it later turns out that the customer’s number was invalid, e.g. the tax authorities database was not up to date, you will be able to rely on the validation record as one element to demonstrate your good faith as a compliant business and, in the UK, to justify why you should not be held jointly and severally liable for any VAT fraud and revenue losses which occur.
We further recommend that you consider regularly checking your EC customer’s VAT registration number to ensure that the details are still valid and the number has not been deregistered.
Alternatively you can contact the VAT Helpline on 0845 010 9000 (see paragraph 1.2). to validate your customer’s VAT registration number and verify that the name and address is correct.
Further and more detailed information is in VAT Notice 742A: Place of Supply of Services which is here http://tinyurl.com/6eplhfu, see sections 19.2 – 19.4.
Basically both notices explain that you while the first place to check is VIES, you can also rely on normal commercial evidence to support the fact that your customer is registered for VAT and HMRC will not normally penalise you for failing to charge VAT; section 19.4 mentioned above says:
Where verification has been undertaken and the details provided were believed to be
correct at that time, but subsequently the customer is found to have made a false
declaration, HMRC will not seek to recover VAT from you, the supplier, where it was not
charged to the customer. This does not apply if there was reasonable information at the
time of the sale to indicate that the customer’s information was incorrect. HMRC’s
treatment of such cases will be subject to periodic review.
In practice, by the time HMRC carries out any review, you’d normally find that the number is on the VIES system so there isn’t an ongoing issue. However if you’re in doubt, you can always charge VAT to the customer and then refund it once you can verify the number on VIES.
Marie