Brand New!! Vat For Non-Uk Artists In Addition To Uk Exhibition Organisers

This mail provides an introduction to recent changes inwards Value Added Tax too VAT registration for both 

• artists living exterior the U.K. who desire to evidence too sell their fine art inwards the UK; and 
• those selling fine art yesteryear overseas artists inwards the UK i.e. the managers of fine art galleries too fine art fairs, the Executive Committees of Art Societies too the organisers of Art Competitions.

Unsurprisingly, in that location are real many people who are non aware of the changes.  Hence this post.

I desire to emphasise that if yous autumn into whatsoever of the inwards a higher house categories yous necessitate professional person advice. I used to hold upward a professional person adviser thus I know plenty to know when something is of import but I'm at nowadays retired from that share of my life too am emphatically non offering professional person advice inwards this post. Not to the lowest degree because but next the trail of announcements too novel publications on the HMRC site is mind-numbing!

Anyway, below I have got a larn at explaining what the province of affairs is.

View of a yesteryear Threadneedle Prize exhibition at the Mall Galleries
This twelvemonth the Threadneedle hopes to encourage to a greater extent than entries from European artists.

Recent changes inwards VAT inwards the UK

If you're an creative somebody intending to evidence operate inwards the U.K. - or yous are an fine art club or fine art contest intending to evidence too sell artworks yesteryear artists non resident inwards the U.K. yous necessitate to hold upward aware that the rules relating to Value Added Tax have got changed

The bottom line is that:

• in monastic say to sell fine art inwards the UK, an creative somebody who does non alive inwards the U.K. too has no recognised too proper line of piece of work concern base of operations here must register for U.K. VAT

• there is no turnover threshold for an creative somebody who does non alive inwards the UK. They must register for VAT if they desire to render ane operate of fine art to a trunk based inwards the UK

• by implication those selling fine art on behalf of artists resident exterior the U.K. must include VAT on the sale too provide a VAT receipt to the buyer (This is non a occupation if yous are making sales via a conventional gallery or a gallery that does fine art fairs - but this does have got major implications for fine art societies too fine art competitions)

• The registration for VAT must be EITHER the earliest engagement that you brand taxable supplies (i.e. artwork) hither OR you await to brand taxable supplies hither inside the side yesteryear side thirty days

• in monastic say to sell operate yesteryear artists non living inwards the U.K. a director of an fine art gallery or fine art fair too the organiser of an opened upward exhibition or fine art contest should inquire an international creative somebody to provide a VAT number earlier their operate tin hold upward brought into the country

• VAT is charged on fine art imported into the UK.

As it happens I'm an accountant yesteryear profession but I stopped keeping upward amongst the changes inwards revenue enhancement police describe a long fourth dimension ago! (I'm retired). What I practise know is it's never a skilful thought to larn on the incorrect side of Customs & Excise when it comes to VAT!

I found out almost the changes when I spotted an advice Federal Reserve annotation equally share of the notes for artists applying to evidence at the Summer Exhibition of the Royal Academy of Art.

It looks innocuous - but it's non - see VAT Information (International Artists)(PDF)

I read it through, realised the implications too instantly contacted the Mall Galleries equally I know a number of the exhibitions held in that location have got artwork yesteryear international artists. I advised them to brand for certain their revenue enhancement accountants took a real unopen human face at the recent changes inwards VAT too how this affects those selling fine art too artists living exterior the UK

As a resultant their Terms too Conditions for artists submitting operate for exhibitions at nowadays includes the next (I've emboldened the NEW conditions).

6. SUBMISSIONS

6.1 If yous are non commonly resident inwards the UK, yous must have got a U.K. VAT registration number earlier your work(s) tin hold upward submitted. You must provide your U.K. VAT number when yous submit.

Artists without a U.K. residence (known equally 'NETPs' - non-established taxable persons) tin discovery farther details on 'NETP' status too how to register for VAT at www.hmrc.gov.uk, (HM Revenue & Customs Reference: Notice 700/1, Mar 2014), nether the heading 'Should I hold upward registered for VAT?'. Please note, the registration procedure tin accept upward to four weeks. Please address whatsoever questions yous may have got to the VAT Helpline on tel. no. 0845 010 9000 or, if your telephone phone is from exterior the UK, +44 2920501 261.

HM Revenue & Customs Reference: Notice 700/1, Mar 2014

This is a link to HM Revenue & Customs Reference: Notice 700/1, Mar 2014 otherwise known as  Should I hold upward registered for VAT? (Acrobat PDF, 320KB)

Below I highlight but about of the key parts relevant to artists living overseas too trying to sell fine art inwards the UK - via fine art galleries, fine art club exhibitions too fine art competitions

That agency this is also relevant to the managers of fine art galleries too fine art fairs, the Executive Committees of Art Societies too the organisers of Art Competitions.

So what does this mean?

1.2 What’s changed?
We have got made changes to the Apr 2010 edition to reflect:

• the introduction of a novel online scheme for registering for VAT

• the removal of the VAT registration threshold for non-established taxable persons

The removal of the VAT threshold relates to a courtroom case. The resultant of this agency that exclusively businesses established inwards a Member State tin practise goodness from its domestic VAT registration threshold. Everybody else doing line of piece of work concern inwards taxable supplies must register for VAT.

So what's a "non-established taxable person" aka NETP?

In layman's price - inwards relation to fine art - this is an creative somebody who lives abroad, who does non have got a house of line of piece of work concern inwards the U.K. too who sells their artwork (i.e. taxable supplies) inwards the U.K. from fourth dimension to time.

The of import indicate is that all artists living exterior the U.K. who don't have got a base of operations hither too who are selling fine art inwards the U.K. inwards 2014 should have got registered for VAT earlier they made the supplies.

Here's the definition according to DMBM530120 - Debt too render pursuit: VAT: liability for payment: Non-Established Taxable Persons (NETPs)

Definition of NETP

A non-established taxable somebody who is:

• not commonly resident inwards the UK
• does non have got a house of line of piece of work concern inwards the UK
• is non incorporated nether U.K. police describe but,

• makes taxable supplies inwards the UK

NETPs may register for VAT inwards whatsoever of the next ways

• directly amongst Aberdeen (050 traders)
• via a U.K. revenue enhancement representative or,
• via a U.K. agent.

The novel VAT regulations have got a whole department devoted to it (section 9)

9. Non-established taxable persons (NETPs): basic information

9.1 What is an NETP?

An NETP is whatsoever somebody who is non commonly resident inwards the UK, does non have got a U.K. institution and, inwards the instance of a company, is non incorporated here.

9.2 What is a U.K. establishment?

A U.K. institution exists if:

• the house where essential direction decisions are made too the business’s fundamental direction is carried out is inwards the UK

and/or

• the line of piece of work concern has a permanent physical presence amongst the human too technical resources to brand or have taxable supplies inwards the UK

We would commonly consider a companionship which is incorporated inwards the U.K. to have got an institution hither equally long equally it is able to have line of piece of work concern supplies at its registered office.

9.3 When must an NETP register for VAT inwards the UK?

From 1 Dec 2012, if yous brand whatsoever taxable supplies (see paragraph 2.3) inwards the UK, yous must register for VAT here, too line of piece of work concern human relationship for whatsoever U.K. VAT to HMRC.

What the novel Regulations province (my bold caps) is that

If

• you are a non-established taxable somebody (see department 9), and
• you brand whatsoever taxable supplies inwards the UK

you MUST register for VAT

In other words, if yous desire to evidence ane operate of fine art inwards the U.K. but don't alive here, yous MUST register for VAT.

The removal of the threshold is real important.  In consequence it creates an uncompetitive province of affairs betwixt artists based inwards the U.K. too those who are based exterior the UK. There is no complimentary movement of goods which appears to hold upward opposite to what the European Union is almost amongst the complimentary marketplace for European Union countries. So there's going to hold upward but about lobbying on this number too when that happens I'll enhance this ane time to a greater extent than on this blog.

[For artists living inwards the UK:

• Your VAT taxable turnover is the full of sales too for certain other supplies yous brand that are acre of report to VAT, including supplies that are zero-rated. If yous sell goods or services that are exempt from VAT they're non acre of report to VAT too thus they're non share of your VAT taxable turnover.
• the threshold for the value of the taxable supplies is at nowadays GBP81,000. When supplies attain this figure inwards the previous 12 months, an creative somebody must register for VAT. ]

When to register to U.K. VAT

This webpage explains When to register for U.K. VAT. It covers

• Who tin too can't register for VAT
• You're doing line of piece of work concern inwards the UK, or intend to start
• You render goods to the U.K. from abroad, or intend to start
• You render goods or services from the U.K. to other countries
• Voluntary registration
• Calculating your VAT taxable turnover
• Do non avoid registering for VAT yesteryear artificially separating line of piece of work concern activities
• More useful links

Interestingly this guidance appears to propose that registration for VAT is optional - but ONLY if yous are supplying to customers who aren't registered for VAT too don't have got to hold upward registered for VAT.

You render goods to the U.K. from abroad, or intend to start

You may necessitate to register for VAT, or yous may hold upward able to select to register voluntarily, if yous are doing whatsoever of the next kinds of line of piece of work concern inwards the UK:

• Supplying too delivering goods from but about other European Union province to non VAT-registered customers inwards the UK. If yous sell too deliver goods (or conform for their delivery) from but about other European Union province to customers inwards the U.K. who aren't registered for VAT too don't have got to hold upward registered, this is known equally distance selling. Common examples are mail monastic say too Internet sales. If the value of your distance sales inwards the calendar twelvemonth from 1 Jan goes over the distance selling threshold, currently £70,000, yous must register for U.K. VAT. You tin also register voluntarily, if yous are trading below the threshold or yous intend to kickoff trading.

Finally - the most helpful too clearest guidance came inwards Revenue & Customs Brief 31/12 Removal of the VAT registration threshold for businesses which are non established inwards the UK
This states

If yous don't alive inwards the U.K. or your house of line of piece of work concern isn't inwards the UK

From 1 Dec 2012, if yous don't have got a line of piece of work concern or fixed institution here, the U.K. VAT registration threshold volition no longer apply to you.

Your registration engagement volition hold upward the earliest engagement that

• you brand taxable supplies here
• you await to brand taxable supplies hither inside the side yesteryear side thirty days

You must register equally a Non-Established Taxable Person (NETP). If you're doing this yesteryear post, yous tin download the application cast VAT 1.

Get cast VAT 1 to register equally a NETP

If yous know that yous volition have got to register for VAT inwards the U.K. when the rules change, yous may desire to register inwards advance. You practise this yesteryear applying for registration inwards the commons way but requesting a afterwards registration date. You volition hold upward registered for VAT from your chosen engagement if HMRC have your asking inside iii months of that date. For example, if yous know yous volition hold upward liable to register from 1 Dec 2012, HMRC volition register yous amongst consequence from that engagement if they have your asking on or after 2 September.

Find out to a greater extent than almost registering for VAT if yous don't have got a house of line of piece of work concern inwards the UK

Read to a greater extent than almost the VAT registration threshold for NETPs inwards Revenue & Customs Brief 31/12 

So in that location yous go. It's almost equally clear equally mud - but it does affair too those probable to hold upward affected actually practise necessitate to larn proper professional person advice equally to their best course of report of action.

Do hold upward aware that if yous register for VAT yous too thus necessitate to consummate their VAT forms - which agency yous too thus necessitate to meticulous amongst your paperwork too accounting records!

PS I'm all the same unclear precisely what the implications are for fine art societies or other organisations selling fine art for an international creative somebody - but I'm trying to discovery out.  I suspect the respond rather depends on the nature of the contractual human relationship too what your price too atmospheric condition say.

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