Place of supply, US sponsor, UK event

Place of supply, US sponsor, UK event: VAT

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Client is running an event in London, they are selling tickets (ok place of supply is UK regardless of where the customer is).  They are also selling sponsorship packages.  One such package is being bought by a US company.  

My understanding is that the general rule would apply and no VAT is charged as the place of supply is deemed to be the US as they are a business customer?

Feels not quite right as the "advertising" they get in return for the sponsorship will be done here in the UK.

Any thoughts?

Replies (4)

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By J T
10th Nov 2016 12:51

From memory (and this is three years since I dealt with it) it depends upon the legal terminology but without having a chance to read it would probably be worded so the place of supply is US.

If it is a package including events outside the country then it is probably outside the scope (subject to terminology). If your charge is for the right to have a presence (stand, hospitality) at UK only events then VAT would apply

From HMRC
https://www.gov.uk/government/publications/vat-notice-741a-place-of-supp...

12.2 What services are covered?

The following services are treated as supplied in the place where the customer belongs when provided to non-EU non-business customers:

transfers and assignments of copyright, patents, licences, trademarks and similar rights
acceptance of any obligation to refrain from pursuing or exercising a business activity
advertising services
services of consultants, engineers, consultancy bureaux, lawyers, accountants, and other similar services - data processing and provision of information, other than any services relating to land
banking, financial and insurance services
the provision of access to, or transmission or distribution through, natural gas and electricity systems and heat or cooling networks and the provision of other directly linked services
supply of staff
letting on hire of goods other than means of transport
emissions allowances

FURTHER EDIT: 12.5 goes on further to say a package of services means the whole is outside even if individual elements would normally be within. I like it when HMRC guidance is clear cut.

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Replying to J T:
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By Portia Nina Levin
10th Nov 2016 12:56

Why are you considering the rules relating to NON-business customers, when the OP seems clear that their customer is a business customer?

I would agree with the OP that, despite it not "feeling right", the supply of advertising to a business customer takes place where the customer is.

I agree that if the customer has a UK presence with which the supply is most closely connected then that is still a UK supply.

However, if the audience is in the UK, but the benefit is received in the US by the US customer, I am not even sure why it does not "feel right".

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Replying to Portia Nina Levin:
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By Taxhurts
10th Nov 2016 21:19

Thanks Portia, the customer runs an app. So although they are based very much in the US - I guess they earn their revenue world wide. So yes this sponsorship will likely generate them customers in the UK and elsewhere. But their work is still performed in US, with no legal presence in the UK.

I'm going to suggest that it is outside of the scope of UK VAT and no VAT is charged.

Thanks both for you input.

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By J T
10th Nov 2016 12:36

Forgot to say it depends upon the nature of the US companies activities within this country as well.

Do they have a UK presence which is being advertised? For a definite answer on that you will probably need Google's lawyers.

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