Exempt supplies abroad

Exempt supplies abroad

Didn't find your answer?

My client sent Teachers abroad mainly to the Middle East to teach English to the locals there.

I understand that TEFL (Teaching of English as a foreign Language) is an exempt supply for VAT purposes in the UK.

However, as the training were all done abroad and the sales invoices were issued to overseas customers, would my client be able to claim all its input VAT - as the supplies might now be considered as  'Outside the Scope of' rather 'Exempted' supplies.

Any help or reference to vat notices would be greatly appreciated. 

Thanks

Replies (1)

Please login or register to join the discussion.

avatar
By johnlarke
06th Jan 2011 08:55

Look for the de minimis rules

Hope I am not too late with this reply.

Up to 31/12/10 the supply of teaching was deemed to take place where the teaching was physically carried out (VATA 1994, Sch 4A, para 4); so the place of supply would have been outside the EU as you surmise, hence outside the scope. From 1/1/2011, B2B supplies are deemed to be made where the customer belongs; so again might well be outside the scope. B2C supplies continue to be made where the activities take place. Notice 741A para 8.1.1 explains this in Table 3. The rule for input tax recovery is in VATA 1994 s.26. This allows input tax recovery in relation to supplies made outside the UK, but only if they would have been taxable if made in the UK.  There are some defined exceptions for supplies that would be exempt in the UK, but I will not go into those; teaching is not among them.  So the conclusion is that in principle you cannot recover input tax related to these teaching supplies; however the input tax may still be reclaimable if it is within the partial exemption de minimis limits, since the de minimis applies also to input tax related to supplies that would be exempt if made in the UK (VAT Regulations 1995, reg. 106).

Thanks (0)