SUSTAINING MEMBERS

(with Links to Websites)

RICHMOND FILM SERVICES

SONY BROADCAST & PROFESSIONAL UK

TELEFILM VIDEO SERVICES

TO VAT OR NOT TO VAT?

Production mixer Malcolm Davies, who recently had a couple of VAT queries answered by his accountant thought other members who supplied their services to overseas companies, either in the UK or abroad, could benefit from the advice he received.

I recently did a commercial in Manchester for a Dublin based company and duly invoiced them, including VAT as the work was carried out in the UK.

When the company paid the invoice they paid it less the VAT and sent a note to say that they were not liable for VAT as they were an Irish-based company. I immediately checked with my accountant who interpreted the regulations as I had had done but he said that just to make sure he would check with Customs & Excise.

Surprise surprise HM C&E quoted VAT leaflet 421 (a 106 page diatribe) which basically says that if you are a technician (they deem sound, camera, dubbing and editing people to fall into this category) then you are in a special area of VAT liability which means that if you do work for someone from outside the UK then this falls outside the scope of UK VAT, even if the work is carried out in the UK.

So the Irish company were correct but were quoting the wrong reasons.

As I do a lot of work in the Isle of Man, I asked the C & E if this arrangement included the island. Back came the reply “Yes it does’. Now, this opens up a whole new can of worms for myself and other members who have done productions there. Nearly all of these films are taking advantage of the special tax breaks for film production and most times the production company involved form an I o M limited company and register for Manx VAT. This means unless you are registered for Manx VAT then your Goods and Services are outside the scope of UK VAT and it should not be charged.

C & E went on to say that if this work (which is deemed to be ‘abroad’ by HM Customs) made a sum of money that puts you above the registration threshold for that country then you are obliged to register yourself for their VAT.

I also find it curious that all the mobile phone networks class the Isle of Man as ‘overseas’ but yet BT have a UK STD code for the island. So beware if you use your mobile phone there - you’ll be charged international roaming rates.

To help you to decide if VAT should be charged, here is the Customs & Excise chart from VAT leaflet 421.