Posted as Anonymous to protect client confidentiality. I have no issues in you all knowing who I am!!!
I should really know the answer to this one but can't see the wood for the trees! I'm sure a fresh pair of eyes will do the trick?!
The situation is as follows:
- Client (CoA) makes taxable supplies of goods directly to consumers (Con) on behalf of their customer (CoB) who is based in IRE (EU)
- The customers of CoB are based throughout the EU but they are mainly in the UK
- CoA charges CoB, CoB charges Con
Under place of supply rules, the supply to the UK end-user is made from the UK to the UK and hence UK VAT should be charged at the appropriate rate (indeed the goods have never left the UK).
Now... the confusion comes about because...
- The supply is that of medical appliances supplied as part of treatment being provided by a medical professional, thus the supply by CoB to Con is Exempt
- Conversely, the supply of the appliances, manufactured by my client CoA would represent a taxable supply (at the appropriate rate)
- Whilst CoA is making a supply of goods, those goods are worthless in the absence of the services of the medical professional provided by CoB. Hence, there is, more than likely, no separately identifiable taxable supply (from the perspective of Mixed Supplies)
From a tax perspective, it would clearly be simpler if CoA sent the goods to CoB in the EU and they were dispatched onwards from CoB, as there would be a clear movement of goods for VAT, EC SL and Intrastat purposes. However, from cost, operational and time-efficiency perspectives, this is not appropriate.
It may seem a strange thing to be getting concerned about as I am 99% certain the UK VAT rate for the initial supply can be Zero Rated. Indeed, if there was a physical transfer of goods, the IRE VAT rate is categorically Zero Rated. However, if it is deemed that CoA is actually making an Exempt supply, this will have a major impact as there will be full/ partial exemption matters to consider!
So, to my question(s)...
- What is the initial sales transaction from CoA to CoB?
- Is this an EU Sale of Goods (Box 8, EC SL, no Intrastat as goods don't leave UK)?
- Is this a taxable UK Sale of Goods (Box 1 & 6, no EC SL, no Intrastat)?
- Is this an Exempt UK Sale of Services in line with (Box 6 only - I know this is a whole other argument)?
- Is this something else?
- Would this trigger a requirement for CoB to register for UK VAT in respect of the above? Is there a requirement under distance selling - even though all CoB supplies would be classed as Exempt?
Any help you can provide which may assist me in seeing the light would be much appreciated. As I say, I am certain this is a simple one but, I seem to have become rather too submerged in it all!
EDIT 1: Incidentally, CoB (the EU company) is providing the medical professionals. The entire sale from CoB to Con is the provision of medical treatment by CoB. CoA is just the manufacturer.