Hey Derek - thanks for pushing this - this is part of what I hope will we can push into a wider discussion about how we can create greater support and understanding for those trying to build businesses in support of the ecosystem - right now, the risk falls entirely on those attempting to deliver a range of network services.
Following our chats, our accountants have gone back on previous advice they gave us that invoices should be zero rated on VAT.
Here is the following:
Generally, VAT on services are issued as per the place of supply rules where B2B supplies are considered to be where the customer is based (if non-UK, then no VAT chargeable) whilst B2C supplies are where your company is based (UK, therefore VAT should be charged).
The supply of your services to the networks cannot be determined to be B2B as the network has no legal jurisdiction, is not VAT registered and has no legal structure or base. Therefore, under UK VAT rules, this supply would automatically revert to B2C and therefore you should be charging UK VAT on your invoices to the networks.
What this means in practice for my company is we now owe HMRC a decent chunk of money.
With the amounts invoiced already, you have two choices:
Assume the amount received/invoiced to date is your gross figure, including VAT, adjust the invoices accordingly and then pay over the VAT, or
Send a VAT only invoice to the network for 20% of the amounts invoiced so far, then pay this over to HMRC on your next VAT return.
Not ideal - at all.