Good afternoon
I would be grateful for some advice.
A UK based, VAT registered Ltd company invoiced a customer in Hong Kong for providing home search services (he is moving back to the UK to live in rented accommodation). The customer challenged the fact he was charged VAT on the supply of service, and the director re issued an invoice with no VAT.
I looked into it and my view is that they should have charged VAT because :
1. Under the general rule for a non-business customer the place of supply is the UK.
2. When the company supplies services relating to land and property, then the place of supply is always where the land or property is located.
I am right in assuming that home search services fall into this category (the accommodation is based in the UK)?
The director thinks he challenged it on the ground this was a relocation, however the invoice was sent to the customer (and not his company) and paid for directly by the customer. Would it make a difference anyway if the cost of home search was covered by the customer's company?
Am I missing something?
Replies (8)
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Place of Supply rules
The service falls within the General Rule for B2C, which is where the supplier is located. This means UK VAT applies.
Even if the employer were funding the service, there is an argument that the supply is to the person who is moving, not to his/her company, so UK VAT would still apply.
VAT recovery
There is a VAT refund scheme which allows non-UK companies to recover VAT paid in the UK. Specialist companies arrange these claims.
Surely no need
Les - why would you need to make a recovery claim if you were the Hong Kong business as no VAT is chargeable as it is not a land related service but merely a procurement service?
No
the supply is Zero rated as supplied to a customer outside the EU. See Notice 741 Section 13 provision of information
Notice 741 Shaun?
Doesn't that only apply to services supplied before 1 January 2010?
I agree with Les that the supply is to the individual, rather than the employer.
However, I think that the place of supply is Hong Kong, by virtue of the fact that the person to whom the supply is made is not a relevant business person, who belongs (at the time the supply was made) in Hong Kong, and is a supply of consultancy/information provision (VATA 1994, Sch 4A, para. 16(1) and (2)(d) and section 15 of Notice 741A).
Being supplied in Hong Kong means that the services are outside the scope and not zero-rated.