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VAT Registration - 'specified supplies,' etc.

25th Apr 2017
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One of those well-hidden VAT topics, which find their way to my desk from time to time.

The main legislation is VAT Act 1994, Sch 1, para 10; and see also s26(2)(b) & (c) regarding input tax recovery for such persons.

Para 10(2)(a) scenario – where a person not otherwise liable to be registered for VAT makes supplies outside the UK, but which would be a taxable supply if made in the UK.

For example, an international haulier based in the UK, whose customers are entirely outside the UK. Similarly, online traders may be able to register under these provisions.

S26(2)(b) allows recovery of input tax by such persons.

Para 10(2)(b) scenario – so-called ‘specified services.’

These are:

  • certain exempt supplies (within the insurance or financial sectors) made to persons outside the EU; or
  • exempt services directly linked to the export of goods to a place outside the EU, or
  • the provision of exempt insurance or financial intermediary services.

These three categories are found in SI 1999/3121, art 3, the Input Tax Specified Services Order. HMRC guidance at VATREG23250 explains this quite badly! In particular, HMRC miss the word ‘or.’

S26(2)(c) allows recovery of input tax by such persons.

The beneficiaries are mainly financial service and insurance companies. There is guidance in HMRC Notice 701/36, para 12.3, and (some) guidance in Notice 701/49, para 9.11.

General rules: the person has to have a UK business establishment (Sch1, para 10(3)), or a branch or agency (Sch 1, para 10(4)). And, the person who wishes to take advantage of the provisions of Sch 1, para 10, has to ‘satisfy’ HMRC that either he makes such supplies, or will make such supplies. He will have to provide sufficient evidence for this.

 

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