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VAT on vehicle installation, Jersey based customer

Labour and goods element of work UK VAT

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I think I am confusing myself...client provides motobility adapative equipment for vehicles. One of their clients is a Jersey resident.  The vehicle will come to UK for the work but is registered in Jersey.  Can the works be out of scope of UK VAT? or is there a need to split labour/parts with VAT allocated accordingly?

Be grateful for some help pointing me in the right direction!

Thanks in advance.

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VAT
By Jason Croke
28th Apr 2022 10:15

The work can be zero rated to the Jersey customer, but there are some (simple) conditions.

Notice 741A
Paragraph 15.9
https://www.gov.uk/guidance/vat-place-of-supply-of-services-notice-741a#...

Work on goods for export is zero-rated provided that all of the following conditions are met:

the goods on which the work is to be carried out must have been obtained, acquired within, or imported into the UK for the purposes of being worked on

the goods must not be used in the UK between the time of leaving the supplier’s premises and exportation

on completion of the work, the goods are intended to be and, in fact are, exported by either

the supplier of the service (or someone acting on their behalf)
the customer (or someone acting on their behalf), if the customer belongs outside the UK

If your supply is zero-rated in anticipation of export but the goods are not in fact exported, you will need to reconsider the liability and adjust the VAT.

So in essence, as long as the car comes to UK and goes back to Jersey and not used by the customer in the UK (ie, they leave the car in the UK for when they return for holidays) then the adaptions/repairs including parts can be zero rated. Your client can use the car on the road to test.

Finally, like all exports, you must hold evidence, so if the customer is arranging to pick the car up personally then you can't zero rate it as no proof they drove it back to Jersey. If a specialist car transporter service is collecting the car, you need to ensure they give you evidence of shipping, so client needs to be mindful they need that proof from the courier.

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Replying to Jason Croke:
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By lja20
28th Apr 2022 11:10

Jason - many thanks for this, extremely helpful. Much appreciated.

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VAT
By Jason Croke
28th Apr 2022 11:20

Just an extra thought.

Goods coming into the UK from abroad (incl. Jersey) would be subject to import duty and import VAT, so it may make sense to get a professional car haulier to move the vehicle across borders and make sure they use a temporary import relief so that the garage or customer isn't hit with an unexpected duty/VAT bill.

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Replying to Jason Croke:
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By lja20
28th Apr 2022 11:42

I think they will struggle to justify the zero rating. The vehicle is not being sold by my client, just worked on/adapted. I suspect (yet to be confirmed) that the client will come to the UK to drive the vehicle back, so won't be able to confirm that the 'parts' have been exported. That's my understanding of the situation so far - I don't think the import duty for bringing the vehicle to the UK will apply.
Thanks again for pointing me in the right direction!

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