View the related Tax Guidance about Place of supply
Exemption ― insurance ― specific transactions
Exemption ― insurance ― specific transactionsThis guidance note provides an overview of specific types of insurance transactions and the associated VAT treatment. This note should be read in conjunction with the Exemption ― insurance ― overview and Exemption ― insurance ― brokers and agents guidance notes. Endowment policiesThe sale of part-paid endowment policies are not exempt under the insurance exemption due to the fact that the risk covered by the underlying insurance remains with the original policyholder. However, this will be treated as a finance transaction so any consideration received will be exempt.Engineering insurance and inspection servicesBusinesses may offer engineering insurance that is intended to protect large capital items of machinery against damage or faults. The insurer may also offer the customer an inspection service in connection with the insurance product which may be used to reduce claims or the level of cover offered.If the inspection services are provided separately and are not incidental to the supply of the insurance, they may be liable to VAT at the standard rate. If they are supplied in connection with the insurance, then the business needs to ascertain whether a single composite supply of exempt insurance has been provided. Please see the Single or multiple supplies ― overview guidance note for more information on what constitutes a single supply for VAT purposes.Friendly societiesThese types of organisations normally provide insurance against accident, sickness, redundancy, old age, etc. They are not for profit organisations and their insurance capital is derived from the payments made
Reverse charge ― buying in services from outside the UK
Reverse charge ― buying in services from outside the UKThis guidance note covers the reverse charge that applies to services that have been bought in from outside the UK. For an overview of VAT and international services more broadly, see the International services ― overview guidance note. For in-depth commentary on the legislation and case law in relation to the reverse charge, see De Voil Indirect Tax Service V3.231.What is the reverse charge?Certain services are subject to a reverse charge when they are bought in from outside the UK. This means that instead of the supplier being required to register and account for VAT on its supply of services as normal, the obligation to account for VAT on the services is actually ‘shifted’ to the customer. The customer therefore treats the service as if it were supplied both to and by itself. In other words, the customer must ‘self-account’ for the VAT on its purchase. The customer is still able to recover the VAT that it charges to itself under the reverse charge subject to the normal VAT rules for input tax recovery. This means that if the customer is entitled to recover all of its VAT, the reverse charge ends up being a simple administrative entry on its VAT return. However, if the customer is not entitled to recover all of its VAT (for example because it is partly exempt), then the reverse charge will have the effect of increasing the amount of VAT
Liability ― freight transport and related services
Liability ― freight transport and related servicesThis guidance note looks at the scope of VAT relief for UK supplies of freight transport and related services. It also looks at VAT relief for intermediary services connected with these kinds of supplies.For the place of supply of freight transport and related services, see the Place of supply of services ― freight transport and related services guidance note.For an overview of liability generally, see the Liability - overview guidance note.For in-depth commentary on the legislation and case law on the liability of freight transports and related services, see De Voil Indirect Tax Service V4.251.Freight transport and related services - the basicsTo the extent that freight transport takes place entirely within the UK VAT relief is not normally available and the liability of supplies will be standard-rated.However, freight transport services can be zero-rated where goods are transported from the UK to another country or vice versa. As well as applying to the transport itself, the zero-rate of VAT can apply to some ‘related’ services and to various intermediary services connected with freight transport. Due to the international nature of many freight transport services, place of supply considerations will also frequently be important to those operating in the sector. Obligations in other countries will need to be borne in mind as a resut. Such rules will not necessarily mirror UK provisions. Scope of zero-rating for freight transport servicesThe transport of goods from within the UK to a place
Liability ― food and catering
Liability ― food and cateringThis guidance note examines the liability of supplies of food and catering.For an overview of the concept of VAT liability generally, see the Liability ― overview guidance note.For in-depth commentary on the legislation and case law on supplies of food and catering, see De Voil Indirect Tax Service V4.217–V4.225.Liability of food ― the basicsWhen considering the liability of supplies of food, the starting point is that there is a broad zero rate for all food. However, this broad zero-rating for food is subject to a number of important exceptions. These exceptions are taken out of the scope of zero-rating and therefore will generally be standard-rated.The exceptions can be conveniently divided into the following categories:•catering•ice cream and other frozen products•confectionery•alcoholic and other drinks•savoury snacks•pet food•home brew kitsAs well as the liability of food supplied in isolation, questions frequently arise over single and multiple / mixed supplies. Commonly, these questions arise where businesses supply a mixture of zero-rated and standard-rated food or a mixture of zero-rated food and other items.What is food?Food (which includes drink) is very broadly defined for VAT purposes and encompasses all of the following:•food for human consumption•animal food•seeds, plants, etc for human or animal food•live animals generally used for making human food
Imports ― special rules for consignments of £135 or less
Imports ― special rules for consignments of £135 or lessThis guidance note looks at the special rules that apply to imports of consignments valued at £135 or less which are located outside the UK at the point of sale.For importing goods from outside the UK generally, see the Imports ― overview (rules from 1 January 2021) guidance note. For movements of goods and Northern Ireland, see the Northern Ireland ― overview guidance note.In-depth commentary on the legislation and case law can be found in De Voil Indirect Tax Service V3.305.Imports of goods sold directly to GB customersWhere a consignment of £135 or less is sold directly to a customer in Great Britain and the goods are located outside the UK at the point of sale the place of supply for VAT purposes is deemed to be the UK. The effect of this is that overseas seller must normally register for UK VAT and account for VAT at the point of sale. However, where the supply is business to business and the customer has a valid UK VAT registration number, then a ‘reverse charge’ applies. This means that the overseas seller is not required to account for the UK VAT and instead the customer ‘self-accounts’ for the VAT due. The customer effectively treats the goods as supplied both to and by itself. This is a very similar mechanism to the reverse charge which applies to services bought in from overseas, for which see the
Place of supply of services ― intermediaries
Place of supply of services ― intermediariesThis guidance note looks at the special place of supply rules that apply to intermediary services.For an overview of VAT and international services more broadly, see the International services ― overview guidance note. For information on agency and its VAT implications more broadly, see the Supply and consideration ― agents, agency and principals guidance note.In-depth commentary on the legislation and case law that applies to intermediaries for the purposes of the place of supply of services can be found in De Voil Indirect Tax Service V3.195. What is the place of supply of intermediary services?The place of supply of intermediary services will depend on whether the intermediary service is supplied B2B or B2C.B2B intermediary services fall under the general rule for the place of supply of services and are therefore supplied where the customer belongs. However, B2C supplies of intermediary services are covered by a special place of supply rule. These are taxed in the same place as the supply to which the intermediary service relates (ie the underlying arranged supply). For discussion of whether a supply is B2B or B2C and for the general rule, see the Place of supply of services ― the general rule, relevant business persons and belonging guidance note.What are intermediary services in this context?Intermediary services in the context of the place of supply of services rules are characterised by making arrangements for a supply by or to another person. They can also be other
Online marketplaces
Online marketplacesThis guidance note deals with the various anti-avoidance provisions that were introduced by the Government in respect of supplies made via online marketplaces. This note includes the provisions coming into effect from 1 January 2021.BackgroundHMRC has introduced a number of changes to the law since 2016 in an attempt to combat VAT avoidance by businesses located in both the UK and overseas who sell goods via online marketplaces. This guidance note provides an overview of the changes that have been introduced.What is an online marketplace?In order to work out whether a business needs to consider the implications, it is necessary to determine what an online marketplace is.The Taxation (Post-transition Period) Bill provides a legal definition of a marketplace and it states:(1) In this Act ―‘online marketplace’ means a website, or any other means by which information is made available over the internet, which facilitates the sale of goods through the website or other means by persons other than the operator (whether or not the operator also sells goods through the marketplace); ‘operator’, in relation to an online marketplace, means the person who controls access to, and the contents of, the online marketplace provided that the person is involved in ―a)determining any terms or conditions applicable to the sale of goods, b)processing, or facilitating the processing, of payment for the goods, and c)the ordering or delivery, or facilitating the ordering or delivery, of the goods.(2) For the purposes of subsection (1), an online marketplace facilitates the
Business promotion schemes ― vouchers
Business promotion schemes ― vouchersThis guidance note deals with the VAT treatment of vouchers that have been issued on or after 1 January 2019.For information on other business promotion schemes, see the Business promotion schemes ― overview guidance note.For more detailed commentary, see De Voil Indirect Tax Service V3.167.What is a voucher?According to HMRC, vouchers will be defined as an instrument, regardless of whether it is in a physical or electronic form, that meets all of the following conditions:•‘either a physical or electronic instrument•that carries an entitlement to be accepted as consideration for the provision of goods or services•where either or both of the goods or services for which it may be accepted, and the persons under an obligation to accept it as consideration for those goods or services, are limited and are stated on or in it•which is transferable by gift’The term ‘limited’ means that an instrument is only applicable to either specified products or specified suppliers, as opposed to money which can normally be used to purchase anything anywhere.Typical examples of vouchers are gift cards and vouchers, pay as you go phone cards, and book tokens.HMRC states that the following are not regarded as vouchers for the purposes of these provisions:•‘discount vouchers and similar•an instrument functioning as a ticket•postage stamps•electronic money, credit cards, prepaid cash cards, currency cards or similar mechanisms for making payments•keys or codes giving access to software (which may be purchased
VAT on property acquisitions
VAT on property acquisitionsThe VAT treatment and considerations in relation to a property purchase depend on the type of property and whether the vendor has elected to waive his VAT exemption or ‘opt to tax’ as it is more commonly known.This guidance note is intended to provide an overview of these considerations. A good summary can also be found in the Overview of VAT and property issues guidance note.Territorial scopeFor property situated abroad, the place of supply of the property transaction (and of any work on the property, such as conveyancing, etc) will be outside of the UK. This will therefore be outside of the scope of UK VAT, although there may of course be local VAT considerations and advice should be sought from a local VAT specialist.For property that is situated in the UK, the UK VAT position will need to be considered. This will depend primarily on the nature of the property.New build eligible propertyFor the investor purchasing a newly built eligible property, their purchase will be zero-rated for VAT purposes. This means that the developer who has sold the property will not charge any VAT on the sale, although they will be in a position to reclaim back the VAT they have incurred on their build costs (with a few specific exceptions). Note that ‘new’ in this context means the first grant of a major interest in an eligible property by the person who has constructed it.An eligible property is:•an eligible dwelling•a building that
Brexit ― cross-border supplies of services after the implementation period
Brexit ― cross-border supplies of services after the implementation periodThis guidance note considers a number of issues that may be relevant to businesses involved in cross-border supplies of services between the UK and the EU in connection with Brexit. It also covers certain transitional rules where there is a risk of double taxation.For an overview of the impact of Brexit on VAT and customs more broadly, see the Brexit ― overview guidance note.For further in depth commentary on the law, see De Voil Indirect Tax Service V1.301.Impact on place of supply of servicesThe UK’s place of supply rules did not change fundamentally after the end of the implementation period. However, there were some consequential changes to the rules / the practical application of the rules as a result of the UK no longer being an EU member state. The changes particularly affected certain services that are not covered by the ‘general’ place of supply rule. For the general rule and special rules, see the International services ― overview guidance note.The table below summarises the kinds of services most affected by changes when the implementation period came to an end:Type of serviceBrexit impactGuidance noteHiring of goodsThe place of supply rules previously contained ‘use and enjoyment’ provisions that could shift the place of supply where it would otherwise be non-EU but the goods were used and enjoyed in the UK (and vice versa). The provisions have changed so use and enjoyment applies
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