כללים באשר לתשלום הוצאות מלבד משכורות למי שאין לו תיק במע"מ – אם אין המידע להלן ברור נא ליצור עמי קשר במידה ויש לך מקרה כזה.

I am writing to advise you that the VAT people seem to be on the warpath against these individuals whom we report under "section 6a" by the payer's issuing an "invoice" to him or herself. This is an area in which I receive many questions and since the list of persons it covers is complicated it is time to set out the position for all clients.

IF YOU ARE LIKELY TO RECEIVE SUCH SERVICES PLEASE SAVE THIS EMAIL WHERE YOU CAN EASILY RETRIEVE IT.

There are two requirements which they are now apparently enforcing:

1. Proof that such income comes to less than the recipient receives in salary/pension – and he must give you a declaration to this effect in advance.
2. Proof that the recipient not only provides services included in the following list but can show on paper that he or she is qualified to do so:

Artistic performances including officiating at same, building/preparation of theatre sets, preparation/marking/supervision/management of examinations, lectures, teaching, training, rehearsal/participation in non artistic events, typing, shorthand, verbal/written translation, writing/editing, conciliation per S.79c of the Courts Act 1984, membership in Commissions set up by law and members of the following professions – agronomist, architect, practical engineer, private investigator, rabbinic pleader, engineer, draughtsman, accountant/tax advisor, interpreter, insurance broker, lawyer, auditor, appraiser, chemical/medical laboratory owner*, doctor, psychologist, physical therapist, veterinarian, dentist/dental technician, organization/management consultant, scientific consultant, economist. (*) It is difficult to see how this person can be mainly salaried if he owns the lab but that's what it says.

Anybody else must either open a VAT file or be paid via salary.

Businesses paying somebody like this will add the cost of the service in their VAT report to both the income and expenditure slots such that the tax will be neither paid nor reclaimed but netted off. If there is a requirement to withhold income tax at source this will be handled via form 102 with salaries etc. In certain cases there is also a requirement to pay national insurance but this is beyond the scope of this message.

Non-profit institutions will pay the VAT via form 102 to the income tax office and will not receive a rebate.