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Where Taxpayers and Advisers Meet

Digitally supplied services

Nonimous
Posts:80
Joined:Thu Jul 16, 2009 12:39 pm
Digitally supplied services

Postby Nonimous » Fri Nov 27, 2020 10:46 am

I was quite happy with my conclusion until my client then confused me...

Client is dealing with a digital conference so is organising podcasts, webchats and running the social media
Contract is with a university in Australia and all invoices are being sent there
Seemed clear to me that this is a business to business supply with recipient outside the EU

Client has then pointed out that the end user might be anywhere and what about the use and enjoyment provisions.
I still think this is a matter for the Australian university. Client has no contract with the end users, is not billing them and does not know with certainty how many there are or where.

Any thoughts appreciated.

les35
Posts:596
Joined:Wed Aug 06, 2008 3:09 pm

Re: Digitally supplied services

Postby les35 » Fri Nov 27, 2020 11:14 am

It looks like an issue for the Australian University.
Is your client's sole contract with the University, or with the conference delegates? Is there a formal agreement?

Nonimous
Posts:80
Joined:Thu Jul 16, 2009 12:39 pm

Re: Digitally supplied services

Postby Nonimous » Fri Nov 27, 2020 11:46 am

thankyou - yes the only contract is with the Australian university.

robbob
Posts:3067
Joined:Wed Aug 06, 2008 4:01 pm

Re: Digitally supplied services

Postby robbob » Fri Nov 27, 2020 1:06 pm

Seemed clear to me that this is a business to business supply
i am not an expert on this area but i will point out that notice 741a says the following ref B2C
2.4 Why its important to establish who is being supplied
There are different rules depending on whether you’re supplying services to consumers B2C or business B2B.
B2C supplies means supplies to a:
private individual
charity, government department or other body which has no business activities
‘person’ (natural or legal) who receives a supply of services wholly for a private purpose
Is it possible this institution may have no business activities and perhaps this could be a B2C transaction?

Trevor S
Posts:72
Joined:Tue Jan 01, 2019 12:37 am

Re: Digitally supplied services

Postby Trevor S » Fri Nov 27, 2020 1:58 pm

Interesting extract. I suppose the logic is that an organisation with no business activities won't be registered for VAT in their own country, so couldn't account for VAT through a reverse charge?

I suspect most such organisations will have some business activity though - even if it's quite minimal. For example a shop/cafe on site? In practice at the moment, transactions to such customers tend to be treated as B2B, provided that they are in respect of the customer's "official" non-business activities. Although there is ongoing litigation by the Welcome Trust in connection with this.

Trevor S
Posts:72
Joined:Tue Jan 01, 2019 12:37 am

Re: Digitally supplied services

Postby Trevor S » Fri Nov 27, 2020 2:02 pm

Sorry, my last post should have read "Wellcome Trust" - spelling was changed by the autocorrect on my phone! It's currently with the CJEU - ref C-459/19.

robbob
Posts:3067
Joined:Wed Aug 06, 2008 4:01 pm

Re: Digitally supplied services

Postby robbob » Fri Nov 27, 2020 6:35 pm

I suppose the logic is that an organisation with no business activities won't be registered for VAT in their own country, so couldn't account for VAT through a reverse charge?
I would say anything related to reverse charge is highly illogical captain in the first place - its a shame they didn't find a different way to avoid the abuse that was going on without making people with 10k income worry about vat moss and having to doa vat registration that is basiclaly a fake registration but they may be able to claim some inputs back and expecting a joiner doing 80k of income a year should know that when they add up their sales for registration purposes they should have known to include the value of payments to google and facebook in their sales totals - the whole thing is ridiculous being frank. Hmmmmm what we need is an office of tax simplifaction that would sort out all these littel funnies and ensure the tax system gets simpler over time.

Onwards and upwards with reverse charge on construction in 4 months time. can't wait till i have the conversation with the subbies where i say bob the vat you used to charge billy please stop - unless billy tells you he is an end user - oh and billy even though bob has stopped charging you vat you still need to pay that vat across to hmrc even though it doesnt exist and while you are at it make up an equal amount of input vat that doesnt exist and claim it back , well thats unless you have swapped onto the flat rate scheme like i told you to do 3 months ago - oh and keep an eye out for bob de-regsitering for vat as thats important as if the reason he doenst charge you vat changes and the lack of vat is now down to him not being vat registred rather than that other reaosn you don'y understand then the input vat back you will have claime back that didnt exist will have bene claimed back in error and you may end up with a surcharge even though you will have overstated your output vat by the same amount. anyone would think i have been practicing the conversation in my head hmmmmm.


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