I work from the UK, and Upwork will not allow me to collect payment unless I provide a VAT number. In the UK, it's only compulsory to have a VAT number if you earn £82,000 a year, so I don't have one. I'm a little unclear on this area, so please bear with me.
Am I right in thinking that if I register for a VAT number, then rather than Upwork charging VAT on its service fee, I will have to raise my prices instead and then submit a VAT tax return at the end of the year and pay the VAT to the government? If this is the case, then despite not being eligible to charge VAT I will have to charge it, and the customer will have to pay more, right?
If I become a VAT registered business, then I think I will have to charge VAT on all work I do on any other sites etc., despite the fact that nowhere else I work for is asking for a VAT number. VAT is clearly not aimed at the kind of freelance work I am doing or people on my level of income, and so ordinarily there would be no reason why I should register.
Can any Upworkers working in the UK help me? If I can't sort this, I'll probably have to quit the website.
@Catriona A wrote:
I work from the UK, and Upwork will not allow me to collect payment unless I provide a VAT number.
That is not true.
You can still work and withdraw your payments, you will just be charged VAT on the service fee and / or membership fees.
I'm not sure to which post you're referring to but can confirm you don't need to have a VAT number in order to work on Upwork. To clarify, if a freelancer doesn't provide a VAT number, the VAT will be applied on services Upwork provides freelancers, including the service fee, paid membership fee and on payments for purchasing additional Connects. You should consult a local tax advisor regarding fees that might be due on the payments you received from your clients on Upwork.
The easiest thing would be to just swallow the VAT on Upwork's service charge and add it to your overall fee.
But I think you might be able deduct the VAT charges that Upwork makes (which are absolutely clear in the Upwork reports), on your tax declarations. Please correct me if I am wrong, but have a look here at "countries outside the EU":
(No decisions have yet been made on VAT since the Brexit referendum)
However, IMO, the best thing to do is to get it from the horse's mouth and consult your local tax office. I have had a lot of dealings with UK tax authorities, and I have always found that they are extremely helpful.
Thank you both for your replies, I appreciate your help.
So, I can receive payments at the moment, but Upwork will charge VAT.
If I register for a VAT number, according to the UK government I will then have to charge VAT on my services. However according to the link Nichola sent me, I would not have to charge VAT to customers outside the EU, and those in the EU with a VAT number.
This means I'd have to check with the client where they're from and whether they have a VAT number before billing them, doesn't it? And also means I'd have to charge VAT to those in the UK, or those in the EU without a VAT number, despite being below the cutoff income. Plus for some of my other translation work the clients are anonymous and the fees cannot be changed, so would I have to start taking VAT off my income there too?
It all seems a bit complicated, and you're right in that it's probably best to just accept the VAT service fee. It's a bit frustrating though as I am far off being eligible to pay it, and registering for a VAT number looks like a huge amount of hassle aimed at bigger businesses.
I will take your advice, and also maybe speak to the tax services next time I have a chance.
Catriona, as Petra says, you are paying VAT on a service.
However, if you want to be absolutely 100% certain that there is is no other way out of paying it, it would not cost more than a phone call to your tax office to get the answers. They will help you, not hinder you!
I am in the same situation as the OP.
My company is not VAT registered and so I don't have a VAT registration number.
I would also point out that if a company is not VAT registered, then it is ILLEGAL to charge VAT.
The way upwork seems to be handling VAT is a mess as far as I can see. Can someone from Upwork who actually understands the law give us a proper answer please?
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