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HMRC internal manual

VAT Place of Supply of Services

Introduction: Applying the rules

Assuming that a supply has been made in the course or furtherance of business by a taxable person, you should ask these questions.

  • What was the nature of the supply?

    The VAT Supply and Consideration (VATSC) manual guidance will help identify if there  

  • Was it a supply of goods or services?
  • Where applicable, was there a single composite supply, or a number of separate supplies?
  • Where there was a single composite supply, what was the predominant nature of the service?
  • Where applicable, was the supply received by a relevant business person?

    See VATPOSS01350.

  • What is the nature of the supply?
  • In which country does the customer belong?

Place of supply rules differ for goods and services and so you will need enough factual information about the supplies in question to enable you to identify their precise nature. Do not rely merely on generic job or invoice descriptions as this may not be a true indication of what the business actually does. If the trader is an intermediary (someone who provides the service of arranging a supply for someone else), it may be essential to identify the supply the intermediary is arranging, the underlying supply (see VATPOSS09000).

It is essential to obtain copies of any contracts between the parties to the arrangements being considered as they are key documents in assisting you in identifying the nature of the supply. If no contracts exist and you do not have a clear understanding of what is being supplied, request that the trader provides you with a written description of the business activity. Other documents that may be obtained to assist in identifying the nature of the business in question are business plans, minutes of board meetings, exchanges of correspondence, emails, and so on.

Many businesses are located in more than one country and so it is essential for certain types of supply (for example, consultancy) to identify the customer’s location (see VATPOSS04000).

When you have obtained full answers to the above questions, consider first the place of supply rules relating to each of the exceptions to the general rule. If none of the exceptions are appropriate, the general rule applies.

Other sections explain what is meant by the general place of supply rule and also identify those services that are exceptions to the general rule.