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Double Taxation Agreements and VAT- Technical Guidance please

  • Member
  • Practice Licence
  • 2 posts
  • # 122060

Good morning

I have a UK-based client who provide some civil engineering services for a company/property located in Uganda.

They are VAT registered, and issued their invoice with 0% VAT.  The customer in Uganda paid 85% of the invoice, withholding 15% and sending it directly to the Uganda Revenue Authority.  They then sent my client a copy of the Tax Credit Certificate.

Can you please advise on the correct way for my client to invoice their customer (i.e. VAT rate, invoice gross amount) and how it should be represented on the VAT return?  I've called HMRC but they didn't seem to know, and promised me a call back that didn't happen.  I'll try again, but was hoping in the meantime to benefit from all your collective wisdom!

If the work was agreed at a price of £40K (net), should they have invoiced £40K with 0% VAT, or £48K?  Is 5% of the invoice total still due to the UK government, as only 15% tax was paid to the Ugandan Government?  And how should all this be represented on the VAT return?  Does Corp Tax come in to all this somewhere?

I can't find a clear answer on what I need to do anywhere...I'm just going round in circles.  Any guidance would be eagerly received.

Many thanks

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