General Overview

Most goods and services purchased are subject to VAT at the relevant rate whether the supply is in the UK or outside the UK. The standard rate in the UK is currently 17½%.

Import duty is also charged for goods purchased from outside the EU. The VAT charged (input tax) may, or may not, be fully recoverable depending on the activity being carried out.

For help or advice on VAT please contact:-

Stephen Humphreys

Extn. 8656

Email: h

2009

VAT and Purchases from outside the UK

Goods

All goods entering the UK from outside the EU are liable for import duty and VAT at the applicable rates. Duty is calculated on the declared invoice value of the goods entering the EU. Universities may apply for relief from import duty for scientific research. Relief can also be claimed for equipment used in medical and veterinary research, training and diagnosis. When duty relief is granted, VAT relief will also apply.Import duty and VAT will be charged at the point of entry into the UK (ie Airport or Port). The carrier handling these goods will normally require payment before the goods are released. Goods entering the UK from other EU member states will not be charged duty as goods can move freely within the EU without charge. VAT will be charged by the Finance Office on taxable items at the standard rate (currently 17.5%) and will be paid over to H M Revenue and Customs in the quarterly VAT returns.

Services

This section explains how to determine the place of supply of the services you receive from outside the UK and who must account for any VAT. For VAT purposes the place of supply is the place where a supply is treated as being supplied, or made. This is the place where it is liable to any VAT. It is essential that you think carefully about the nature of any services that you receive. You must have a clear understanding of the nature of services before you can identify the appropriate place of supply rule.

It is assumed that services are made where the supplier belongs (this is known as the basic rule), and VAT will be charged on the invoice, unless any of the services are covered within the special rules. The basic rule will only apply if a supply of services cannot be seen to fall under any of the special rules.


VAT and Purchases from outside the UK

The table below details some of the types of services, which have special rules, and the appropriate VAT treatment.

Services relating to land and property –
The place of supply of services that relate to land or
property are where the land itself is located, irrespective of where the customer or supplier belong.
Examples of land related services are:-
• Hotel accommodation
• Exhibition stands
• The supply of plant or machinery, together with an operator, for work on a construction site.
• Services of estate agents, auctioneers, architects, surveyors, engineers and similar professional people relating to land.
• Legal services such as conveyancing or dealing with applications for planning permission.
• Packages of property management services / VAT Treatment –
VAT is due in the country
where the land itself is
located, therefore it will
be added (if appropriate)
to the invoice by the
supplying company.
If the land is located in
the UK but the supplier
belongs outside the UK,
VAT will be added by the
Finance Services.
Services supplied where performed:
These are services involving physical performance, where they are physically carried out, irrespective of where the supplier or the customer belong.
Examples of services supplied where performed are:
• Scientific services, eg technicians carrying out tests
or experiments in order to obtain data. The final
compilation of your record of results.
• Sporting services, eg sportspersons appearing in
exhibition matches, races or other forms of
competition.
• Services relating to exhibitions, conferences or
meetings, eg an oral interpreter at an event or
meeting or carpenters and electricians erecting and
fitting out stands at exhibition venues.
• Educational and training services. Such services are
exempt in the UK when made by Universities.
• Valuation of, or work carried out, on goods.
Services covered by this section generally relate to a live
event or physical activity. / VAT Treatment –
VAT is due in the country where the service is physically carried out and
will be added to the invoice by the supplying company.
If the service is carried out in the UK but the supplier belongs outside the UK, VAT will be added by the Finance Office.
Passenger transport
The place of supply of passenger transport is where it
takes place. / VAT Treatment –
VAT is due in the country
where the supply of
passenger transport
takes place
Services supplied where received:
• Transfers and assignments of copyright, patents,
licenses, trademarks and similar.
• Advertising services
• Services of consultants, engineers, consultancy
bureaux, lawyers, accountants and other similar
services; data processing and provision of
information (but excluding from this head any
services relating to land)
• Banking, financial and insurance services
(including reinsurance, but not including the
provision of safe deposit facilities).
• The supply of staff.
• The letting on hire of goods other than means of
transport. / VAT Treatment –
VAT is due in the country where the
service is received.
If the service is received in the UK by the University then VAT will be added at the appropriate rate by the Finance Office.

Why is VAT added by the Finance Office?

Normally, the supplier of a service is the person who must account, to the tax authorities, for any VAT due on the supply. However, in certain situations, it is the customer who must account for any VAT due.

In practice this means we have to charge VAT to ourselves (and pay over to HMRC in our quarterly VAT returns) on relevant goods and services purchased from other EU member states, and services received from outside the EU.

Goods purchased from outside the EU will have the relevant VAT and import duty charged at the point of entry into the UK (normally by the carrier).

8.1.1 Table 3 Changes effective from 1 January 2010 and 1 January 2011

Service description / Place of supply from 1 January 2010 / Place of supply from 1 January 2011
Services of work on, or valuation of moveable goods; and
ancillary transport services. / B2B supplies are subject to the B2B general rule. See section 5.
B2C supplies are made where the services are physically performed.
Services relating to cultural, artistic, sporting, scientific, educational, entertainment or similar activities (including fairs and exhibitions); and
ancillary services relating to such activities, including services of organisers of such activities. / B2B and B2C supplies are made where the services are physically carried out. / B2B supplies are subject to the B2B general rule and the place of supply is where the customer belongs. See section 5.
B2C supplies are made where the activities actually take place.
B2B supplies of services in respect of admission to cultural, artistic, sporting, scientific, educational, entertainment or similar events (including fairs and exhibitions); and
B2B supplies of ancillary services relating to admission to such events. / Supplied where services physically carried out. / The place of supply is where the events actually take place.

Further information can be obtained from:

• HM Revenue & Customs website: http://www.hmrc.gov.uk

Notice 741 - Place of Supply of Services

·  http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&propertyType=document&id=HMCE_PROD1_027316

·  http://www.hmrc.gov.uk/vat/cross-border-changes-2010.htm