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UK VAT - Charging client VAT

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Chris L Member Since: May 4, 2018
1 of 8

Hi

 

I'm relatively new to upwork but I'm in a bit of a dilemma when it comes to charging clients VAT

 

I work as a limited company in the UK and the company is registered for VAT, therefore outside of Upwork I charge all my UK based clients 20% VAT on top of my fees. If they are VAT registered they can then claim this back.

 

If I am working for a UK client on upwork I am obligated as a VAT registered company to charge them VAT and produce a VAT invoice for them to then claim the VAT back if they are able to.

 

If I don't I'm breaking the UK tax rules and putting myself at risk.

 

Upwork appears to give no facility to charge a client VAT, however I'm not allowed to charge them outside of Upwork either.

 

Other freelancing sites give the option to add VAT to a clients invoice but unless I'm missing something upwork doesn't allow this feature.

 

This doesn't leave me with many options, as I see it in order to stay within the rules I only have 2:

 

1) Add 20% to my fees to clients on Upwork, pay this to HMRC as VAT, however my client won't get the opportunity to claim it back, so the tax man does rather well (and upwork get the additional fees for the extra cash). This also means I'm no longer competitive price wise, so I'm less likely to win work.

2) Don't use Upwork and miss out on what appears to be the best platform for available work.

 

I'd really appreciate hearing what others do in a similar position.

 

Thanks

Chris

 

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Gavin L Member Since: Sep 25, 2020
2 of 8

I'm wondering myself. Does anybody know please? @Goran V maybe?

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Goran V Moderator Member Since: Mar 24, 2017
3 of 8

Hi Chris and Gavin,

I would recommend reaching out to a local specialist that can advise you accordingly about this. Thank you.


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Chris L Member Since: May 4, 2018
4 of 8

Hi Goran

 

Thanks for the reply. I have consulted with a local specialist (my accountant) and they agree I have to charge VAT and issue a VAT invoice, including my VAT number which allows a VAT registered company to claim it back.

 

My issue is that Upwork gives me no facility to do this in a way which doesn't  break their terms and conditions.

 

Other freelancing sites allow me to generate such an invoice on their site, Upwork does not.

 

Thanks


Chris

 

 

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Vladimir G Moderator Member Since: Oct 31, 2014
5 of 8

Hi Chris and Gavin,

 

I'd like to follow up on Goran's response and clarify the process of applying VAT for, in this case, Upwork users located in 28 European countries on Upwork.

 

The VAT charged by Upwork is only for the VAT on the service fees that Upwork charges you for using Upwork's services. Upwork does not charge and does not take responsibility for VAT that may or may not be due on charges by you as a Freelancer to your client. If you and your client both have VAT numbers but they are operating in a different country than you, Upwork will print “VAT Reverse Charged” on the invoice from you to your client so the client can self-assess VAT. In the case where your client is in the same EU country or has no VAT number we will not be able to apply a reverse charge to your client’s invoice and you will be responsible for self-assessing VAT and issuing them an invoice.

I understand your request and will share it with our Product Team.

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Gavin L Member Since: Sep 25, 2020
6 of 8

Upwork says this about VAT: Upwork is required to collect this tax and pay it to the appropriate government agency. https://support.upwork.com/hc/en-us/articles/211061278--Value-Added-Tax-VAT-

 

So they clearly understand what VAT is, they just have no interest in allowing freelancers to honour their own, identical requirements.

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Gavin L Member Since: Sep 25, 2020
7 of 8

Vladimir

Let's say we're not talking about Upwork charging VAT for its commision, and we're not talking about multiple countries. Say the freelancer is in UK and the client is in UK. Both are VAT registered. Can the freelancer create a seperate invoice outside of Upwork, to cover the missing VAT that the freelancer is required to charge and submit to HMRC, without breaking Upwork's terms?

Gavin

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Vladimir G Moderator Member Since: Oct 31, 2014
8 of 8

Hi Gavin,

 

Creating a separate invoice for a payment processed on Upwork si not an Upwork TOS violation, if that's what you're asking. Other freelancers will be able to provide more insight and share their experience with managing specific needs like the one discussed on this thread as we can't provide legal advice. You can also search for previous conversations on this topic and can assure you that you'll find very detailed information shared by other freelancers living in the UK or other European countries.