In with the new

I understand that under the ‘old’ reverse charge system for goods the value of EU acquisitions had to be included as taxable turnover for the purpose of determining whether the registration threshold had been breached.

However I understand from HMRC that the same rule does not apply to the ‘new’ reverse charge system for services.

My client is in the money transfer business and therefore is VAT exempt. They purchased services from a German consultancy company and because they were able to prove that they are in business (albeit not VAT registered) the German supplier did not have to charge them VAT.

Because they are not VAT registered they did not have to pay the VAT under the reverse charge.

This seemed a bit too good to be true so I telephoned the VAT helpline for confirmation which they duly gave.

I raised the issue of...