VAT on Jersey Customer

VAT on Jersey Customer

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I have a client who maintains aeroplanes. He has a customer who flew his plane into the UK, my client worked on it and then it was flown back to Jersey.

He has charged the customer VAT as the place of supply was in the UK.

However, the customer is complaining that he shouldn't have been charged VAT and my client is saying that his rivals also don't charge VAT in this type of scenario & so therefore he shouldn't either.

Am I missing something here or am I right and he should be charging VAT.
S Rogers

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Euan's picture
By Euan MacLennan
21st Nov 2008 15:44

I think you are wrong
The repair of goods is normally a service supplied where physically performed, but there are two exceptions where the goods subsequently leave the UK (which is not difficult when the goods take the form of an aeroplane!).

One is where the customer is registered for VAT in another EC state and the goods leave the UK after the work has been done, in which case the customer must provide his VAT registration number and account for VAT in his own country under the reverse charge procedure, but no UK VAT is charged.

The other is where work is done on goods which are then exported outside the EC, in which case the supply is zero-rated.

Have a look at Sections 7.5, 7.6 & 8 of VAT 741.

Jersey is not in the EC, so the maintenance service qualifies as a zero-rated export. Incidentally, your client should also not charge UK VAT on work on departing aeroplanes for VAT-registered customers in the rest of the EC.

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By sadierogers
21st Nov 2008 16:17

Thanks Euan, that is extremely useful.

Its a shame HMRC couldn't provide me with the same information when I rang them but I have learnt from experience their advice can be a bit shakey.

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