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HMRC internal manual

VAT Place of Supply of Services

From
HM Revenue & Customs
Updated
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Miscellaneous issues: Recovery of input tax

A UK supplier can recover input tax related to the supplies of services listed in VAT Act 1994 section 26(2). These are

  1. taxable supplies - section s26(2)(a)
  2. supplies made outside the UK which would be taxable if they were made in the UK - section 26(2)(b)
  3. supplies specified by the Treasury in an order to that purpose - section s26(2)(c).

The Value Added Tax (Input Tax) (Specified Supplies) Order 1999 (SI 1999/3121) is such an order and the supplies of services specified are those that either

  1. are made to a person who belongs outside the EC
  2. are directly linked to the export of goods to a place outside the EC
  3. consist in the provision of intermediary services within the meaning of item 4 of Group 2 (Insurance), or item 5 of Group 5 (Finance), of Schedule 9 to the VAT Act 1994 in relation to any transaction specified in (a) or (b) above

provided the supply is exempt, or would have been exempt if made in the UK, by any item of Group 2 (Insurance), or any of items 1-6 and item 8 of Group 5 (Finance), of Schedule 9 to the VAT Act 1994.

A person who makes no taxable supplies in the UK but makes supplies under (3) above is entitled to be registered on a voluntary basis. A person who makes no taxable supplies in the UK but makes supplies under (2) above will be able to register on a voluntary basis if

  • they have a business establishment or usual place of residence in the UK, and
  • they receive taxable supplies from UK VAT registered businesses, for which they are entitled to recover input tax
  • they receive taxable supplies from another Member State which are subject to the reverse charge, or
  • they import goods into the UK, for which they are entitled to recover input tax.

You can find out more about registration procedure in VAT Notice 700/1: Should I be registered for VAT? and in the registration manual. You can find out more about the operation of the Specified Supplies Order regarding insurance services in the insurance manual.