As a UK VAT registered business, we have an obligation to charge VAT where appropriate on behalf of HM Revenue and Customs.
We often work with Non UK, and Non EU clients, supplying Exhibition Display and Trade Show Contracting services both within the UK, EU and Internationally.
HMRC VAT rules can become very onerous and require a good knowledge of the VAT rules to ascertain whether VAT should be charged or not, of course most clients outside the EU wish for the latter to be the case, 20% can add a substantial sum to any companies exhibiting budget.
VAT Status can further be complicated depending on whether a ‘service’ or ‘goods’ are being supplied, and if we are hiring any part of the job.
It is often difficult for someone at HMRC to define what ‘goods’ or ‘services’ are, but generally it can be defined as:
A good is something that can be held – a physical item.
A service is something intangible, it cannot be transported or stored.
(such as ‘Hire of Equipment’, although ‘Storage’ itself is classed as a ‘service’).
We sometimes bill separately for each type of supply, ie the physical stand components, and then the installation (a service), but the distinction between goods or services can become confused when an install is performed a distance from us here, the ‘service’ (install) part of the job becomes predominant – and so we can include the ‘components’ as being part of the service, as these are seen as being ‘incidental’, so a ‘service’ is charged for all.
HMRC themselves publish Notices to help ascertain VAT on goods or services we supply outside the UK:
VAT Notice 741a; Place of supply of services
VAT Notice 703; Export of goods from the United Kingdom
(strictly speaking goods supplied within the EU are not classed as exports)
VAT Notice 725; The Single Market
A riveting night time read for all.
The simple rule to follow is:
A ‘Service’ follows ‘Goods’ in precedence.
– if ‘Services’ are being supplied, then ‘Place of Supply of Services’ (Notice 741a) applies.
(non UK, but EU VAT Registered customers, receiving a service outside the UK but within the EU – the supply is zero rated (it is outside the scope of UK VAT) and should appear in box 6 of the VAT return (Sage T4 VAT code), for non EU customers – that is outside the scope of UK VAT, and so is exempt, also box 6 of the VAT return (Sage T2 tax code).
– if ‘Goods’ are being supplied, then ‘The Single Market’ (Notice 725) applies.
If supplying goods in the UK to a non EU customer, standard VAT is charged (Sage T1 VAT code), if supplying to an EU customer, ‘The Place of Supply’ applies, so the countries EU VAT rules apply – the sale here is zero rated (Sage T4 Vat Code), with the EU customer accounting their side with a reverse charge. Where supplying an EU customer with ‘Installed or Assembled’ goods (see Notice 725 Section 11) and place of supply is the UK, then standard UK VAT is applied.
Where we attend trade fairs in the EU, and our clients (most usually a business, B2B rules section 5 notice 741a apply) who reside outside of the EU (section 8.1.1 Notice 741a) , and we supply a service, we fortunately need not charge VAT, special conditions apply for services relating to ‘exhibitions’, and the place of supply is deemed to be the clients place of business (general rule), rather than the place of supply of the service, ie which is usually which ever EU exhibition hall we attend.
Where we supply a non EU company with goods and the place of supply is within the EU, it is still an export and VAT is Zero. When supplying an EU company (but not UK company) with goods, and the place of supply is in the EU, the supply is zero rated, entries in box 6 of the VAT Return.
Non EU companies supplied (and used) with goods (ie exhibition displays) and services (ie installation fees) within the EU, but which are then exported with a time limit (3 months) – then Zero Rating applies, although the customer is normally charged the full VAT then refunded once the correct evidence of export is provided, HMRC being very particular about the evidence, photo copies should be ‘authenticated’ – and any paperwork give comprehensive descriptions (ie serial numbers etc) VAT Notice 703 section 6.0 ‘Proof of Export’ explains.
When supplying a Non EU ‘B2B’ customer with a storage ‘service’ (ie we store for them here in the UK), the Place of Supply applies (VAT notice 741a, section 2.4.1). The rules on storage state that as long as we do not provide a specific piece of land, and storage is within our premises, but not an exclusive area just for them, it is considered outside the scope of VAT, and is exempt (Sage T2 Tax code).
And of course where goods are being supplied to an EU company, and place of supply is the UK, (and the goods have been used prior to export), Standard rating applies, VAT Notice 725, section 4.3 explains. EU VAT registered companies can reclaim UK VAT paid via the UK’s VAT Refund Scheme: http://www.hmrc.gov.uk/vat/managing/international/EU-visits.htm
Specialist reclaim companies exist to deal with VAT matters when dealing with non UK and EU customers, for $50 Quipsound will endeavour to reclaim VAT paid for clients who may have been charged VAT incorrectly:
Quipsound – ‘VAT Recovery Worldwide’
TMF Group – An accountancy firm engaged in VAT recovery, registration and advice