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VAT on supply of home search service

VAT on supply of home search service

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Good afternoon

I would be grateful for some advice.

A UK based, VAT registered Ltd company invoiced a customer in Hong Kong for providing home search services (he is moving back to the UK to live in rented accommodation). The customer challenged the fact he was charged VAT on the supply of service, and the director re issued an invoice with no VAT.

I looked into it and my view is that they should have charged VAT because :

1. Under the general rule for a non-business customer the place of supply is the UK.

2. When the company supplies services relating to land and property, then the place of supply is always where the land or property is located.

I am right in assuming that home search services fall into this category (the accommodation is based in the UK)?

The director thinks he challenged it on the ground this was a relocation, however the invoice was sent to the customer (and not his company) and paid for directly by the customer. Would it make a difference anyway if the cost of home search was covered by the customer's company?

Am I missing something?

Replies (8)

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chips_at_mattersey
By Les Howard
10th Jun 2014 14:02

Place of Supply rules

The service falls within the General Rule for B2C, which is where the supplier is located. This means UK VAT applies.

Even if the employer were funding the service, there is an argument that the supply is to the person who is moving, not to his/her company, so UK VAT would still apply.

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By Chipette
10th Jun 2014 14:10

Thank you, glad you agree with me!

The director has now two choices: re-issue the invoice for the 3rd time- or swallow the VAT!

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chips_at_mattersey
By Les Howard
10th Jun 2014 15:25

VAT recovery

There is a VAT refund scheme which allows non-UK companies to recover VAT paid in the UK. Specialist companies arrange these claims.

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By shaun king
10th Jun 2014 18:01

Surely no need

Les - why would you need to make a recovery claim if you were the Hong Kong business as no VAT is chargeable as it is not a land related service but merely a procurement service?

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By Chipette
10th Jun 2014 18:42

For clarification

1. Home search is not as I first thought a land and property related service (further reading of HMRC guidance show as an excluded example: "Advice or information relating to land prices or property markets because they do not relate to specific sites")

2. However because the customer is not a business the place of supply is the UK and therefore VAT is chargeable.

Agree?

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By shaun king
11th Jun 2014 09:53

No

the supply is Zero rated as supplied to a customer outside the EU. See Notice 741 Section 13 provision of information

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By Steve Kesby
11th Jun 2014 10:27

Notice 741 Shaun?

Doesn't that only apply to services supplied before 1 January 2010?

I agree with Les that the supply is to the individual, rather than the employer.

However, I think that the place of supply is Hong Kong, by virtue of the fact that the person to whom the supply is made is not a relevant business person, who belongs (at the time the supply was made) in Hong Kong, and is a supply of consultancy/information provision (VATA 1994, Sch 4A, para. 16(1) and (2)(d) and section 15 of Notice 741A).

Being supplied in Hong Kong means that the services are outside the scope and not zero-rated.

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By Chipette
11th Jun 2014 12:03

Thank you all for your advice.

 

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