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Place of Supply for service performed outside EU

What is the place of supply for a UK company performing a service abroad to a private customer

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Hi all,

I'm hoping someone can help me with this, as I can't seem to find an iron clad answer:

A director of a UK VAT registered company flies to Japan and meets a group of non business customers and guides them around Japan for 2 weeks for a £1000 fee.

Every customer is a private individual and not a business customer.

All services are provided in the non EU country (showing them around cities, finding them a hotel, fixing their vehicle should it break down etc). The customers pay a fee to the director only for his knowledge of the country they are in. For example the director merely finds them a hotel, and the customer then books and pays for the room themselves.

Customer 1: A U.S. citizen pays £1000 to the UK company bank account for the privilege of the tour.

Customer 2: A UK citizen pays £1000 to the UK company bank account for the privilege of the tour.

Is the £1000 fee subject to VAT? Eveything I've found so far doesn't seem to cover the scenario of a UK based company phyically providing the service outside of the EU to a private individual.

Any help with this would be greatly appreciated, and a given this is the internet, a source would be perfect.

Thanks.

Replies (10)

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Psycho
By Wilson Philips
20th Oct 2020 15:55

The basic rule is that for non-business customers the place of supply is where the supplier belongs.

But you need to consider whether any of the over-ride rules (eg place of enjoyment) apply to the supplies. My feeling is that they won't in this case - so subject to UK VAT.

Thanks (2)
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By frankfx
20th Oct 2020 16:07

12. B2C services of a professional, technical, financial, intellectual or other intangible nature supplied to customers outside the UK or EU
12.1 Introduction
This section applies if:

HMRC guidance

you belong in the UK
you supply B2C services to customers who belong outside the EU
those services are included in the list in paragraph 12.2

Where this applies, your services are supplied '................

''where your customer belongs''

and so are outside the scope of VAT.

It’s the nature of the service that you should consider, rather than your professional qualification or status.

Thanks (0)
Replying to frankfx:
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By frankfx
20th Oct 2020 16:37

frankfx wrote:

12. B2C services of a professional, technical, financial, intellectual or other intangible nature supplied to customers outside the UK or EU
12.1 Introduction
This section applies if:

HMRC guidance

you belong in the UK
you supply B2C services to customers who belong outside the EU
those services are included in the list in paragraph 12.2

Where this applies, your services are supplied '................

''where your customer belongs''

and so are outside the scope of VAT.

It’s the nature of the service that you should consider, rather than your professional qualification or status.

SENT THE ABOVE BEFORE ADDING A LINK

here is a link to some ' decision tables'

https://www.revenue.ie/en/vat/vat-on-services/when-is-vat-charged-on-ser...

It demonstrates the line of thought required to reach conclusion.

Yes it is Ireland , however it is EU supply rules that are applied , intended to provide HARMONY peace and love in our time .

Thanks (0)
Replying to frankfx:
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By Guide41
23rd Oct 2020 10:32

I had a look at that link for the decision tables and I can't see anything about intellectual services.

I would say that the service supplied is 100% intellectual. The customers are paying purely to have the "guide" around. The actual journey is pretty much unplanned with only a vague overview of the trip known before. The customers pay the "guide" because he's known to be able to fix pretty much anything, and has travelled around the world on a motorcycle so many times that nothing fazes him anymore. So the customers are employing him as a safety net and someone to help steer them away from bad ideas and towards fun.

Think of it as hiring MacGyver to follow you around on holiday.

Thanks (0)
Replying to Guide41:
Psycho
By Wilson Philips
23rd Oct 2020 10:47

Given that the issue is about UK VAT I would suggest that you look at the legislation and guidance for UK. Although VAT is an EU-wide tax there are some differences, some more subtle than others, from State to State.

In particular, you should consider VATA 1994 Sch 4A paras 14 and 16 and consider whether the activities fall within either. As someone else has already suggested, para 14 may be the more relevant but from your description above I remain quite unconvinced.

Thanks (0)
Replying to Wilson Philips:
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By Guide41
25th Oct 2020 08:17

After having quite a think, I would say that the service being providing is consulting.

The spirit of the tour advertised is "I'm going to ride around Japan for 2 weeks, if you pay me some money, I'll let you follow me around and you can ask me any questions you have and I'll tell you what I think is a good idea to do". It's also in the disclaimer the customer signs that the service is paying for is consultation during the tour for things like routes to take and what vehicle repairs to carry out etc.

The tour guide has also provided this same service remotely for customers over Skype in the past, where they've sent him money in exchange for a video call to help offer advice on how to solve their current predicament (or also help them plan a tour).

As far as I can tell, given he's a mobile consultant and thus the place of supply is where the customer belongs. But, what happens if he then repairs someone's puncture for them because they can't do it themselves? Is he now 0.2% mechanic and 99.8% consultant?

Thanks (0)
Replying to Guide41:
Psycho
By Wilson Philips
25th Oct 2020 10:21

I remain unconvinced but you are better-placed than anyone here to understand the precise nature of your client’s services. Depending on the amount of VAT at stake I might consider a request to HMRC for a written ruling.

Thanks (0)
chips_at_mattersey
By Les Howard
20th Oct 2020 17:01

Or, if the service includes air travel, then it falls within the Tour Operators Margin Scheme. SI 1987//1806 art 5. This is deemed to take place from where his 'fixed establishment' is located.
Probably the same answer, but via a different route!

Thanks (0)
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By The Dullard
21st Oct 2020 15:51

I think the place of supply is Japan. VATA 1994, Sch 4A, para 14A refers (subject to TOMS definitely not applying, which the OP indicates). If it doesn't fall within 14A(2)(a), 14(2)(b) will catch it. And, note the 2nd bullet under para 9.5 in VAT Notice 741A. Thus all supplies are outside the scope (but registration and input VAT recovery are both still possible).

I don't agree that it falls within para 16, which doesn't take the supply to the UK individual outside the scope in any event.

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Replying to The Dullard:
Psycho
By Wilson Philips
21st Oct 2020 16:14

I also agree that para 16 does not apply. However, I'm far from convinced that para 14(2) applies. The OP would need to provide far more information to persuade me that my 'feeling' above is wrong.

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