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Place of supply + reverse charge for non-EU service invoices

Posted: Thu Jan 10, 2019 10:14 am
by bilderberg
I work for a UK based VAT registered company with turnover in excess of £10M and subject to statutory annual audit.

The company is seeking to engage a marketing consultant to improve the business online marketing, lead generation, website, seo etc. The consultant that has been selected operates from a Seychelles LTD corporate entity, so a business outside the EU would provide services to a UK based business, B2B.

The consultancy services would be delivered via telephone, email and collaboration tools, via modifications to the company's online advertising campaign accounts with Google, via modifications to the company website, via video meetings, and perhaps for one or two days a month in person at the company offices.

I am trying to determine for sure what the place of supply would be, and whether reverse charge VAT applies or not.

1. According to HMRC guidance 741a point 6.3
https://www.gov.uk/guidance/vat-place-of-supply-of-services-notice-741a#sec6
HMRC general rule states that the place of supply is the place where the customer is located - in this case our company is the customer, so we are assuming HMRC determine the place of supply is the UK. Is this correct? Does the detail about the method of delivery of the service (much of it being delivered digitally) matter at all in determining the place of supply?

2. According to HMRC guidance 741a point 5.6
https://www.gov.uk/guidance/vat-place-of-supply-of-services-notice-741a#sec5
They give an example where a US business supplies a UK business and state that since the place of consumption is the UK, reverse charge VAT applies. If the place of supply is indeed the UK, then in our case the invoice for consultancy services I am assuming is going to be subject to reverse charge VAT?

3. Our company also imports physical goods from outside the EU which are subject to some additional duties. Are the purchase of consulting services from outside the UK/EU subject to any additional UK/EU customs or import tax or duty, other than the application of VAT to the transaction via reverse charge (if applicable)?

I've gone round in circles with this for ages, so any clarity anyone can provide would be greatly appreciated!

Re: Place of supply + reverse charge for non-EU service invoices

Posted: Fri Jan 11, 2019 12:55 pm
by les35
I think this is a General Rule service, so the Place of Supply is where the recipient is located, ie: UK. Reverse Charge applies.

Re: Place of supply + reverse charge for non-EU service invoices

Posted: Sat Jan 12, 2019 7:00 am
by bilderberg
Thanks - would reverse charge be the only duty that applies? I couldnt find any reference to import tax on services into the EEA, only on physical products.

Re: Place of supply + reverse charge for non-EU service invoices

Posted: Sat Jan 12, 2019 10:38 am
by robbob
would reverse charge be the only duty that applies?

There is no duties with regard to services as there are no physical items crossing a border - thankfully, simply the uk output vat that you need to apply (with matching inputs - if allowable) under the reverse charge.