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VAT treatment of B2C services - e-learning courses

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My question is as follows:

  • Company based in UK provides e-learning lifestyle/self improvement courses to private individuals worldwide (mainly USA, Canada & Australia, but also UK)
  • Courses last 6 weeks and are hosted on a private website
  • Course materials included pre-recorded videos, downloadable PDF documents and also live 1 on 1 suppport from the company director and access to Facebook chat groups
  • HMRC has confirmed that the courses are not digital services due to the manual/human intervention involved

Is the place of supply the UK?

If so are all course fees subject to 20% VAT, regardless of where the student is located, or are the courses sold to non-uk residents outside the scope of VAT?

Is there any pre/post Brexit difference to how the courses should be treated for VAT purposes?

Many thanks.

 

Replies (7)

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By Matrix
07th Apr 2021 17:40

I have spent hours on this and, based on the facts for my client providing online services, these are education services where the tutor and customer are in different countries. According to the VAT manual the supply should fall under consultancy services which are supplied where the customer is located.

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Replying to Matrix:
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By PhilipJPark
07th Apr 2021 17:51

Matrix wrote:

I have spent hours on this and, based on the facts for my client providing online services, these are education services where the tutor and customer are in different countries. According to the VAT manual the supply should fall under consultancy services which are supplied where the customer is located.

Likewise - that's what I thought and hoped would be the case but am curious to see if anybody disagrees?

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By The Dullard
07th Apr 2021 17:45

Whilst not being digital services, they would seem to satisfy the definition of electronically supplied services (within paras 9(3)(c), (e) and (f)) for the purposes of para 15(1) and 15(2)(a) of Sch 7A to VATA 1994. That would mean that the place of supply is where the recipient belongs.

Pre and post Brixet, this might necessitate registration in (other) EU member states if the student was located there. God only knows what the position is for the purposes of the various GSTs around the globe.

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Replying to The Dullard:
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By PhilipJPark
08th Apr 2021 09:29

The Dullard wrote:

Whilst not being digital services, they would seem to satisfy the definition of electronically supplied services (within paras 9(3)(c), (e) and (f)) for the purposes of para 15(1) and 15(2)(a) of Sch 7A to VATA 1994. That would mean that the place of supply is where the recipient belongs.

Pre and post Brixet, this might necessitate registration in (other) EU member states if the student was located there. God only knows what the position is for the purposes of the various GSTs around the globe.

OK thanks - a good reference point - what a minefield!

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Melchett
By thestudyman
08th Apr 2021 09:32

I would potentially ask HMRC again. According to their own link, pre recorded videos and pdfs automatically provided are classed as electronically supplied, though the one to one teaching is not.

https://www.gov.uk/guidance/the-vat-rules-if-you-supply-digital-services...

The key factor is not that it is a digital service, but if it is electronically supplied.

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By PhilipJPark
16th Apr 2021 11:53

I think that this case Mandarin Consulting Limited v HMRC [2020] TC07714 is supportive of the sales to non-UK consumers being outside the scope of VAT as this would appear to be a similar scenario in terms of the general services provided, though it is important to note that these were deemed to be consultancy and not education for VAT purposes.

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Replying to PhilipJPark:
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By The Dullard
16th Apr 2021 13:05

That's interesting. Based on Mandarin, I'd agree that the principal supply in your OP is consulting, rather than education. Since it is provided remotely over t'internet though, that distinction isn't relevant as both electronically supplied education and consulting, where they are B2C, are deemed supplied where the customer belongs (if the customer is outside the UK, post 31/12/20, or outside the EU, pre 1/1/21).

In both cases, the additional PDF/video material could be considered electronically supplied and thus potentially VAT-MOSSable, if supplied in a way that means it is not all part and parcel of the same supply. To the extent that the customers are outside the EU though (which you indicate is the case), that too is a non-issue.

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