VAT and Purchases from outside the UK

Document Sample
VAT and Purchases from outside the UK Powered By Docstoc
					                                                VAT and Purchases from
                                                    outside the UK

Corporate Accounting          General Overview
Finance Services
                              Most goods and services purchased             Import duty is also charged for goods
Northcote House               are subject to VAT at the relevant rate       purchased from outside the EU.
                              whether the supply is in the UK or
                              outside the UK.                               The VAT charged (input tax) may, or
                                                                            may not, be fully recoverable depending
                              The standard rate in the UK is currently      on the activity being carried out.
For help or advice on
VAT please contact:
Liz Shillingford

Extn. 3098                    Goods
Email:                        All goods entering the UK from outside the EU are liable for import duty and VAT at
E.E.Shillingford@             the applicable rates.
                              Duty is calculated on the declared invoice value of the goods entering the EU.
or                            Universities may apply for relief from import duty for scientific research. Relief can
Ian Toogood                   also be claimed for equipment used in medical and veterinary research, training
                              and diagnosis. When duty relief is granted, VAT relief will also apply.
Extn. 2213
                              Import duty and VAT will be charged at the point of entry into the UK (ie Airport or
Email:I.M.Toogood@            Port). The carrier handling these goods will normally require payment before the                  goods are released.

                              Goods entering the UK from other EU member states will not be charged duty as
                              goods can move freely within the EU without charge. VAT will be charged by
                              Finance Services on taxable items at the standard rate (currently 17.5%) and will
                              be paid over to H M Revenue and Customs in the quarterly VAT returns.

                              This section explains how to determine the place of supply of the services you
                              receive from outside the UK and who must account for any VAT.

                              For VAT purposes the place of supply is the place where a supply is treated as
                              being supplied, or made. This is the place where it is liable to any VAT.

                              It is essential that you think carefully about the nature of any services that you
                              receive. You must have a clear understanding of the nature of services before you
                              can identify the appropriate place of supply rule.

                              It is assumed that services are made where the supplier belongs (this is known as
                              the basic rule), and VAT will be charged on the invoice, unless any of the services
                              are covered within the special rules. The basic rule will only apply if a supply of
                              services cannot be seen to fall under any of the special rules.

     March 2009                                                                                              Page 1 of 3
                        Produced by Liz Shillingford, Finance Services
                                        VAT and Purchases from
                                  VAT Coding continued
                                                   outside the UK
                              The table below details some of the types of services, which have special rules, and the
Corporate Accounting
                              appropriate VAT treatment.
Finance Services
                              Services relating to land and property                         VAT Treatment
Northcote House
                              The place of supply of services that relate to land or         VAT is due in the country
                              property are where the land itself is located, irrespective    where the land itself is
                              of where the customer or supplier belong.                      located, therefore it will
For help or advice on                                                                        be added (if appropriate)
VAT please contact:           Examples of land related services are:                         to the invoice by the
                                                                                             supplying company.
Liz Shillingford              •     Hotel accommodation
                              •     Exhibition stands                                        If the land is located in
Extn. 3098                                                                                   the UK but the supplier
                              •     The supply of plant or machinery, together with an       belongs outside the UK,
Email:                              operator, for work on a construction site.               VAT will be added by the
E.E.Shillingford@                                                                            Finance Services.                  •     Services of estate agents, auctioneers, architects,
                                    surveyors, engineers and similar professional people
or                                  relating to land.
Ian Toogood                   •     Legal services such as conveyancing or dealing with
                                    applications for planning permission.
Extn. 2213
                              •     Packages of property management services.
Email:I.M.Toogood@                  Services supplied where performed:                             VAT Treatment

                              These are services involving physical performance,             VAT is due in the country
                              where they are physically carried out, irrespective of         where the service is
                              where the supplier or the customer belong.                     physically carried out and
                                                                                             will be added to the
                              Examples of services supplied where performed are:             invoice by the supplying
                              •     Scientific services, eg technicians carrying out tests
                                    or experiments in order to obtain data. The final        If the service is carried
                                    compilation of your record of results.                   out in the UK but the
                              •     Sporting services, eg sportspersons appearing in         supplier belongs outside
                                    exhibition matches, races or other forms of              the UK, VAT will be
                                    competition.                                             added by the Finance
                              •     Services relating to exhibitions, conferences or
                                    meetings, eg an oral interpreter at an event or
                                    meeting or carpenters and electricians erecting and
                                    fitting out stands at exhibition venues.
                              •     Educational and training services. Such services are
                                    exempt in the UK when made by Universities.
                              •     Valuation of, or work carried out, on goods.
                              Services covered by this section generally relate to a live
                              event or physical activity.

     March 2009                                                                                              Page 2 of 3
                        Produced by Liz Shillingford, Finance Services
                                               VAT and Purchases from
                                                   outside the UK

Corporate Accounting     Passenger transport                                           VAT Treatment
Finance Services
                         The place of supply of passenger transport is where it        VAT is due in the country
Northcote House          takes place.                                                  where the supply of
                                                                                       passenger transport
                                                                                       takes place

                         Services supplied where received:                             VAT Treatment
For help or advice on
VAT please contact:
                         •      Transfers and assignments of copyright, patents,       VAT is due in the
Liz Shillingford                licenses, trademarks and similar.                      country where the
                                                                                       service is received.
Extn. 3098               •      Advertising services
                         •      Services of consultants, engineers, consultancy        If the service is
Email:                          bureaux, lawyers, accountants and other similar        received in the UK by
E.E.Shillingford@               services; data processing and provision of             the University then                    information (but excluding from this head any          VAT will be added at
                                services relating to land)                             the appropriate rate by
or                                                                                     Finance Services.
Ian Toogood              •      Banking, financial and insurance services
                                (including reinsurance, but not including the
Extn. 2213                      provision of safe deposit facilities).
                         •      The supply of staff.
Email:I.M.Toogood@             •      The letting on hire of goods other than means of

                         Why is VAT added by Finance Services?
                         Normally, the supplier of a service is the person who must account, to the tax
                         authorities, for any VAT due on the supply. However, in certain situations, it is the
                         customer who must account for any VAT due.

                         In practice this means we have to charge VAT to ourselves (and pay over to HMRC in
                         our quarterly VAT returns) on relevant goods and services purchased from other EU
                         member states, and services received from outside the EU.

                         Goods purchased from outside the EU will have the relevant VAT and import duty
                         charged at the point of entry into the UK (normally by the carrier).

                          Further information can be obtained from:
                          •     HM Revenue & Customs website:
                                Notice 741 - Place of Supply of Services

                          •     The Financial Handbook

     March 2009                                                                                         Page 3 of 3
                        Produced by Liz Shillingford, Finance Services

Shared By:
Description: VAT and Purchases from outside the UK