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No UK VAT number

catanderson95
Active Member
Catriona A Member Since: Oct 5, 2016
1 of 28

 

Hello,

 

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. 

 

Thanks,

Catriona

petra_r
Community Guru
Petra R Member Since: Aug 3, 2011
2 of 28

@Catriona A wrote:

 

Hello,

 

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.

 

 

woodcraftdesign
Active Member
Ben W Member Since: Mar 14, 2018
3 of 28

So you are saying we should register for a VAT number? Will I need to do tax returns?

vladag
Community Manager
Vladimir G Community Manager Member Since: Oct 31, 2014
4 of 28

Hi Ben,

 

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.

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colettelewis
Community Guru
Nichola L Member Since: Mar 13, 2015
5 of 28

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":

 

http://europa.eu/youreurope/business/vat-customs/cross-border/index_en.htm

 

(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.

 

 

catanderson95
Active Member
Catriona A Member Since: Oct 5, 2016
6 of 28

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.

 

Thank you!

 

 

petra_r
Community Guru
Petra R Member Since: Aug 3, 2011
7 of 28

Catriona, you'll be just charged VAT on the service fee, not on what you earn.

 

It is much like when you go shopping at Tesco's - you pay VAT on "stuff" Smiley Happy

colettelewis
Community Guru
Nichola L Member Since: Mar 13, 2015
8 of 28

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! Smiley Happy

 

stevep99
Active Member
Steven P Member Since: Oct 6, 2016
9 of 28

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?

 

vladag
Community Manager
Vladimir G Community Manager Member Since: Oct 31, 2014
10 of 28

Hi Catriona and Steven,

 

Please refer to the information we shared in this Help article in order to understand the way Upwork is charging VAT on its service fees, memberships and additional Connects, and how those charges are remitted to EU governments.

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