I am a small business currently zero rated for VAT. My understanding is that I don’t charge VAT for software development for a US based client.
The question is do i have to include this sale in my flat rate turnover. If I do I will be paying 14% VAT , but receiving nothing fro the customer
Thank you for your question – I hope you find the answer you’re looking for.
In the meantime please do check out this HMRC video on trading outside of the EU.
Our Ref: Webinar 12
If you are providing software development to a business based in the US the supply is outside the scope of UK VAT if falling within the B2B (business to business) general rule for services described in section 5 of VAT Notice 741A – Place of supply of services. This includes the production of customised computer software and maintenance involving upgrades. (Please note that some ‘off-the-shelf’ software packages are treated as supplies of goods). (please see link below)
You exclude from your flat rate turnover any supplies outside the scope of UK VAT. Paragraph 6.3 of VAT Notice 733 – Flat Rate Scheme for small businesses refers. (please see link below)
HM Revenue & Customs
Customs International Trade & Excise
Thanks for the comprehensive answer. We are definitely supplying customised software development , so it all look clear to me