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Brace for Brexit 10: Digital services shock


Neil Warren investigates whether some digital supplies will suffer double VAT, or escape VAT completely, from January 2021 after the transition period for leaving the EU.

25th Nov 2020
Independent VAT Consultant
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In Brace for Brexit 6 I explained that the general business to business (B2B) and business to consumer (B2C) rules for services will be unchanged when the UK’s transition period  for leaving the EU ends, the status quo is maintained. I also considered the confirmation from HMRC that the list of services where no VAT is charged if a B2C customer is based “outside the EU” will change to “outside UK” – VAT Notice 741A, section 12. This is good news for many businesses.

Use and enjoyment of services

However, there is another important issue to consider as far as services are concerned, and these relate to those services where a ‘use and enjoyment’ override applies. In other words, the general B2B and B2C rules do not apply. It is worth listing these services – they are contained in VAT Notice 741A, section 13.

  • the letting on hire of goods (including means of transport)
  • electronically supplied services (B2B only)
  • telecommunications services (B2B only)
  • repairs to goods under an insurance claim (B2B only)
  • radio and television broadcasting services

Changes on 1 January 2021

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Replies (4)

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By Casterbridge Hardy LLP
26th Nov 2020 11:17

I could do without this additional merry go round of uncertainty!

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By prospera
26th Nov 2020 15:04

Do either of these scenarios already apply with any countries outside the EU? The overriding principle now seems to be that EU countries will be treated in the same way that the rest of the world already is.
So in theory, any problems are not new on a global scale, just apply to a far higher proportion of our international trade.

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Replying to prospera:
Jason Croke
By Jason Croke
27th Nov 2020 08:40

That's correct, the EU is now just "rest of the world", businesses which have always bought goods from say China or sold to rest of world will be familiar with import paperwork, but businesses which have only dealt with the EU are the ones most affected.

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By hunnyg
03rd Mar 2021 10:27

This is such a great resource that you are providing and you give it away for free. I love seeing blog that understand the value of providing a quality resource for free

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