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VQOTW: REVERSE CHARGE SERVICES FROM OVERSEAS

VAT l

My client is an insurance company, they are VAT registered and partially exempt (85% exempt/15% taxable). They have invested £200,000 in bespoke computer software. The software was written for them by an Israeli company, who are renowned leaders in software security. HMRC have recently inspected the insurance business and made an assessment of £34,000. My client is confused as to how they have a VAT assessment on an invoice that didn’t even have any VAT on it.