View the related Tax Guidance about Place of supply
Introduction to setting up overseas ― companies
Introduction to setting up overseas ― companiesA UK company expanding overseas may do so in a variety of ways, including:•distance trading from the UK, with no local presence•a branch, which can be formed with just one employee working from home•a fully established local subsidiaryThe decision to trade in another jurisdiction involves a number of considerations, both commercial and tax-related. Some of the key tax issues include whether the activities constitute a permanent establishment and how the overseas activities should be structured. It is important, at the outset, that advice is taken by the company, not only in relation to tax, but on the wider business implications.The tax position of the UK company overseas will depend on the extent to which the company does business in the jurisdiction and the choice of overseas entity from which to carry on the business. In most cases, establishing the overseas operation will involve a choice between running the business as a branch or via a local subsidiary. There are a number of commercial and tax considerations which need to be considered in arriving at the most appropriate choice. For further discussion on the choice of overseas entity, see the Setting up overseas ― branch or subsidiary guidance note.A useful review of the tax impact of a business expanding overseas is given in ‘Practice guide ― Lifecycle of a business: international expansion’ by Helen Cox and Gemma Grunewald in Tax Journal, Issue 1472, 11 (24 January 2020).For a factsheet which summarises
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.Reverse charge ― the basicsCertain 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 due to HMRC. The
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 outside the UK is zero-rated to
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 foodVATA 1994, Sch 8, Pt II, Group 1, General Items, note 1Food for human consumption ― generalHMRC generally takes the view that an item of food is for human consumption if
Liability ― energy-saving materials
Liability ― energy-saving materialsThis guidance note provides information about the VAT treatment of energy-saving materials.For in-depth commentary on the legislation and case law relating to the VAT treatment of energy-saving materials, see De Voil Indirect Tax Service V4.294.For information about the VAT treatment of grant-funded supplies to qualifying persons, see the Land and buildings ― building work ― extensions, improvements, maintenance and repairs guidance note.What are energy-saving materials?Providing the conditions that are explained later in this guidance note are met, the zero rate of VAT applies to the services of installing any of the following energy-saving materials in a relevant structure and to the supply of the energy-saving materials by the supplier that installs them:•insulation for walls, floors, ceilings, roofs or lofts or for water tanks, pipes or other plumbing fittings•draught stripping for windows and doors•central heating system controls, including thermostatic radiator valves•hot water system controls• solar panels•wind turbines•water turbines•ground source heat pumps•air source heat pumps•(from 1 February 2024) water source heat pumps•micro combined heat and power units•boilers designed to be fuelled solely by wood, straw or similar vegetal matter•(from 1 February 2024) electrical storage batteries that are intended for use solely for storing energy converted from electricity that was supplied to the relevant structure or generated by a microgeneration system •(from 1 February 2024) smart diverter devices capable of automatically diverting electricity generated by a microgeneration system to one or more appliancesVATA 1994, Sch
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 Reverse charge ― buying in services
Land and buildings ― building work ― extensions, improvements, maintenance and repairs
Land and buildings ― building work ― extensions, improvements, maintenance and repairsThis guidance note provides information on the VAT treatment of extending, improving, maintaining and repairing buildings located in the UK.For further commentary on the legislation and case law please refer to De Voil Indirect Tax Service V4.407, V4.408 and V4.413.Work on buildings located outside the UK is outside the scope of UK VAT but may be subject to VAT or a similar tax in another country. For information on VAT in the EU please refer to the VAT in the EU guidance note. For information on VAT outside the EU please refer to the VAT outside the EU guidance note. The general distinction between work carried out in relation to an existing building and work constructing a new buildingWork carried out to extend, improve, maintain or repair an existing building:•may be carried out on a standalone basis in relation an existing building•may be carried out in the course of converting an existing building•is, subject to the exception explained below, distinct from work carried out in the course of constructing a new buildingThe general rule is that work carried out to extend, improve, maintain or repair a building of any description is distinct from work carried out in the course of constructing new buildings. The exception to this general rule is that an existing building of any description may be enlarged or extended in the course of constructing a new dwelling or dwellings. For example, an
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 business to business (B2B) or business to consumer (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?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.
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 using a voucher)•vouchers
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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