VAT imports -place of supply rules
I am trying to advise a client in connection with the place of supply rules for imports in the context of EU imports to UK(nonEU) after a possible hard Brexit, where goods sold by a UK VAT-registered seller are delivered straight from an EU factory to the UK customer. I have found several non- HMRC commentaries with guidance such as:
“The basic rule is that goods are treated as supplied at the place where they are when their dispatch or transport to the customer begins, or the place where they are when the supply takes place if they are not to be dispatched or transported.
Therefore, goods are supplied at the place where they are when allocated to the supply in question. The location of the person making the supply does not have any effect on the place of supply of the goods, nor does the place where the goods are at the time when title in them passes. The place of supply is the place where they are when they first become identified with the particular supply.”
However, I cannot find where this rule appears HMRC’s own guidance. There doesn’t appear to be any ‘place of supply rules’ section in the VAT Notice 700, or 702 Imports or 725 Single Market.
The actual legislation VATA 1994 S7(6) says;
“Goods whose place of supply is not determined under any of the preceding provisions of this section shall be treated as supplied in the United Kingdom where—
(a)their supply involves their being imported from a place outside the member States; and
(b)the person who supplies them is the person by whom, or under whose directions, they are so imported.”
Tolleys VAT manual goes on to clarify that
“Where the supplier imports the goods the place of supply is the UK
Where the customer imports the goods the place of supply is outside the UK”
According to the non-HMRC guidance above, the place of supply would always be where the orders are fulfilled, and the transport begins i.e at the EU factory, and a non UK sale.
According to the HMRC/ Tolleys guidance, the change of title from supplier to customer determines the place of supply. If the customer was invoiced when the goods left the factory it would be a non-UK sale. If the customer were only invoiced when the goods had arrived in the UK it would be a UK sale.
Which of these is correct? Or am I misinterpreting something?