When a UK IT consultant supplies services to a business customer outside the UK, the general rule puts the place of supply where the customer belongs, so no UK VAT is charged. An EU business customer normally accounts for VAT itself under the reverse charge, and the invoice should say so. These sales do not count towards the £90,000 VAT registration threshold, and the off payroll rules in Chapter 10 do not apply to a client with no UK connection, though Chapter 8 may.
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This page covers the invoice itself: VAT treatment, wording, evidence, currency and the IR35 point. If you are also moving abroad yourself, start with the guide for IT consultants working abroad.
Where is my IT service supplied for VAT?
VAT Notice 741A sets the rules. For business to business services, the general rule is that the supply is made where the customer belongs. Services supplied in another country are outside the scope of UK VAT, and no UK VAT is chargeable where the place of supply is outside the UK. IT consultancy for business clients usually follows this general rule unless one of the special rules in the notice applies.
For private individuals the starting point is the reverse: the place of supply is where the supplier belongs, so a UK consultant would normally charge UK VAT. The notice lists exceptions, including services of consultants, which are treated as supplied where the customer belongs when the customer is outside the UK and not in business. Digital services sold to consumers follow separate rules, covered in VAT on digital services to overseas consumers. The full set of rules is in place of supply of services.
How do I show my customer is in business?
The business to business rule only works if you can show the customer is a business. Notice 741A says you may presume a customer is in business if they give you their VAT number, and for EU customers a VAT registration number is the best evidence. Other evidence can include certificates from tax authorities or commercial documents showing the customer’s activities. Without a VAT number or other evidence, the supply should be treated as business to consumer. Keep the evidence with your records. For US and other clients without VAT numbers, see proving business status of overseas customers.
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What should an invoice to an EU business say?
The European Commission’s guidance says an EU business that buys services from a supplier outside the EU should usually pay VAT at its own country’s rate under the reverse charge, and can usually deduct it on its VAT return. The EU’s invoicing rules require the words “reverse charge” where the customer is liable for the tax, and the customer’s VAT number on a full invoice in that case. HMRC’s own guidance on VAT invoices also says that where the customer is liable to pay the tax, the invoice must include a reference such as “Reverse charge supply”.
Notice 741A adds that invoices should avoid general descriptions and make clear the nature of the services, because your records must hold enough evidence that the place of supply is outside the UK. A practical invoice to an EU business shows:
- your company name, address and, if registered, your UK VAT number
- the customer’s name, address and VAT number
- a specific description of the work, such as “development of payment module, March 2027”
- the net amount with no UK VAT charged
- the words “Reverse charge”
What about clients in the US and other countries outside the EU?
The UK side is the same: a business customer outside the UK means the supply is outside the scope of UK VAT. The customer’s own country decides whether any local sales tax or VAT applies, so check with the client or a local adviser. US clients often ask for a tax form before paying. The IRS says Form W-8BEN-E is used by foreign entities to document their status for chapter 3 and chapter 4 purposes, and can be used to claim a reduced rate of, or exemption from, withholding under an income tax treaty. If a US client asks for it, your company completes it. It is a US withholding form, not a VAT document.
Do overseas sales count towards the VAT registration threshold?
No. GOV.UK says you must register if your taxable turnover for the last 12 months goes over £90,000, or you expect it to go over £90,000 in the next 30 days, and that out of scope sales do not count. A consultant whose clients are all overseas businesses does not have to register. You can register voluntarily, and Notice 741A allows you to recover input tax, subject to the normal rules, on costs relating to supplies made outside the UK which would be taxable if made in the UK. That makes voluntary registration worth considering if you have significant UK costs. See sales to overseas customers and the VAT threshold.
Can I invoice in euros or dollars?
Yes. HMRC’s VAT Trader Records Manual says amounts on a VAT invoice can be expressed in any currency, and only the total amount of VAT payable has to be shown in sterling. On an invoice outside the scope of UK VAT there is no UK VAT to convert. Your company still records the sale in sterling in its accounts, and exchange differences on settlement are covered in foreign currency gains and VAT on foreign currency invoices.
Does IR35 apply when the client is overseas?
HMRC’s Employment Status Manual says that where the client is wholly overseas, meaning it is not UK resident and has no UK permanent establishment, the off payroll rules in Chapter 10 do not apply. The client does not issue a status determination statement. Instead, your own company should consider whether Chapter 8, the original IR35 rules, applies,. A client that is overseas but has a UK permanent establishment still has Chapter 10 duties. See IR35 when the client is overseas and Chapter 8 compared with Chapter 10.
| Client | UK VAT | Invoice wording | IR35 rules to consider |
|---|---|---|---|
| UK business | Standard UK VAT if you are registered | Normal UK VAT invoice | Chapter 10 or Chapter 8, depending on the client |
| EU business with a VAT number | Outside the scope | “Reverse charge” and the customer’s VAT number | Chapter 8 if the client has no UK connection |
| US or other non EU business | Outside the scope | Clear description; no UK VAT | Chapter 8 if the client has no UK connection |
| Private individual outside the UK | Outside the scope for consultancy services | No UK VAT | Not usually relevant |
| Overseas client with a UK branch | Take advice | Take advice | Chapter 10 may apply |
Illustration only. Alex runs a UK IT consultancy that is not VAT registered. Over the last 12 months it invoiced a German software firm €60,000, a US bank $40,000 and a UK retailer £35,000. Only the UK sales count as taxable turnover, so the company is well under the £90,000 threshold. The German invoices show the customer’s VAT number and the words “Reverse charge”, and the German firm accounts for German VAT. The US bank asks for Form W-8BEN-E, which Alex completes. Neither overseas client has any UK presence, so Alex reviews each contract under Chapter 8 rather than waiting for a status determination.
Frequently asked questions
Do I charge VAT if my EU client gives me no VAT number?
Notice 741A says that without a VAT number or other evidence of business status, the supply should be treated as business to consumer. Ask for the number before you invoice, or collect other commercial evidence that the client is in business.
Can I register for VAT if all my clients are overseas?
Yes. GOV.UK says you do not have to register if you only sell exempt or out of scope services, but you can choose to register voluntarily. Registration can let you recover input tax on related costs.
Who pays the VAT under the reverse charge?
The customer. The European Commission says an EU business buying services from outside the EU should usually pay VAT at its own country’s rate and can usually deduct it in its VAT return.
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Sources
- GOV.UK: Vat place of supply of services notice 741a
- europa.eu: Index en
- taxation-customs.ec.europa.eu: Invoicing en
- GOV.UK: manual page VATREC5010
- www.irs.gov: Forms for foreign beneficial owners
- GOV.UK: Register for vat
- GOV.UK: manual page VATREC5060
- GOV.UK: manual page ESM10025
Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 6 November 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.