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Three parties are involved in a supply: A, the UK software supplier, B the UK-based agent, and C, the end-user located in Spain. C only accepts and pays invoices from B, but what effect does this have for VAT?
We wonder whether readers could clarify the following VAT issue. The parties involved are: company A a UK software supplier; company B which is an agent based solely in the UK; and company C which is the end-user of the software and which is located in Spain and nowhere else.
The contract between B and C clearly states that B is an agent for A in supplying the software to C. However C will only accept and pay an invoice from B and will not deal with A.
Because B is a disclosed agent the VAT law treats A as making a supply directly to C so A would need to invoice C because this will be an outside-the-scope supply with reverse charging to be applied by C.
The problem is that C will not pay this invoice. To circumvent this impasse A invoices...
