Chapter 22 Place of supply Flashcards
22.1 Introduction
Goods – when dealing with international goods we must focus on the place of supply. Goods leaving the UK have a UK place of supply, good arriving in the UK do not have a UK place of supply. For goods it is irrelevant where the supplier is based. Where we have a UK place od supply, we need to consider the UK VAT implications
Services – where the place of supply of services is in the EU, the supply is liable in that country for VAT. If that is not the UK this is outside the scope of UK VAT. Where the place of supply is outside the EU, the significant for a UK business is as follows:
• If a UK business supplies services and the place of supply is in the UK, any VAT due must be accounted for
• If a UK business supplies services and the place of supply is in another EU state, either the UK supplier or the customer is liable to account for VAT due
22.2 Rules for supply of services
There are two general rules for determining the place of supply for services:
• One for supplies of services from business to business, and
• One for supplies of services from businesses to consumers
Where one business supplies services to another business, the place of supply is where the customer belongs.
Where one business supplies services to a consumer, the place of supply is where the supplier belongs.
22.3 Exceptions to the general place of supply services rules
The exceptions are:
• Services related to land – place of supply is the country the land is situated
• Passenger transport – place of supply is the country in which the transport takes place. If transport is in several countries the liability is split based on milage in each country
• Admission to cultural events and entertainment events – place of supply is where the event takes place
• Other services supplied to non-EU residents – applies to B2C transactions only. The place of supply is where the customer belongs
22.4 Reverse Charge
A reverse charge is where the customer has to account for the VAT on their VAT return in the output box. Usually the customer would pay the VAT to the supplier and it would be the supplier entering the VAT on the return.
Where we have a B2B supply, the general rule is the place of supply is where the customer belongs, if the supplier is overseas but the customer is in the UK, it is a UK supply and UK VAT must be accounted for and paid to HMRC. The customer includes the output VAT on their VAT return and where they can reclaim VAT, they also include this as input tax to recover.
