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HMRC internal manual

VAT Place of Supply of Services

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HM Revenue & Customs
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Belonging: Usual place of residence

Private individual

The usual place of residence of a private individual is not defined in the law. We interpret the phrase as meaning the one country where the individual spends most of their time for the period in question. It is likely to be the country where the individual has set up their home, lives with their family and is in full time employment. As far as possible, this should coincide with the actual economic situation. Individuals are not treated as belonging in a country if they are short term, transitory visitors (for example if they are visiting as tourists, to receive medical treatment or for a short term language/other course).

For VAT purposes, persons who have not been granted a right or permission to remain in the UK should be treated as belonging in their country of origin. This will apply to, for example, asylum seekers and those entering without permission. Belonging in this context involves something more than mere presence. In these circumstances, the country in which individuals have their usual or permanent place of residence can only reasonably be seen to be their country of origin unless and until they are granted the right to remain in the UK.

Once an individual is granted leave or permission to remain in the UK, then the place of supply of any services they receive, for example legal services supplied to a person that has been granted asylum in relation to obtaining a work permit, will be on the basis they are regarded as belonging in the UK.

Where an individual is granted the right or permission to remain in the UK and this expires or is subsequently revoked for whatever reason, they should be treated, for VAT purposes, as resident in the UK until such time as the issue is concluded (including the time taken to go through any appeal process). VAT should be charged on all relevant services supplied to such a person, subject to the normal rules.

In exceptional circumstances, an individual may not have had an identifiable country of origin. Such individuals are in effect stateless and should be treated, for VAT purposes, as belonging in the UK. For example, a situation may arise where a person is granted exceptional leave to remain in the UK on the basis that their country of origin is unknown and their claim to be a British citizen cannot readily be verified.

Case law

In the case of USAA Ltd (LON/92/1950A) (VTD 10369), the Tribunal considered the meaning of usual place of residence of US Forces personnel living in England. It found that such personnel living in England on a three year term of duty had their usual place of residence in the UK. During the tour of duty, if they had a permanent address in the form of a home in the USA, it was let. If they returned for training to the USA, their families remained in the UK. The US personnel could not therefore be regarded as having their usual place of residence in the USA.

In Razzak & Mishari (LON/97/754), [1997] VATTR 392, (VTD 15240), the Tribunal held that the supply of legal services in respect of UK proceedings by a UK solicitor to Mrs Shaik Haseena, a woman of Indian nationality, was received in India and was outside the scope of UK VAT

Mrs Haseena lived with her Kuwaiti employers as a servant for several years, first in Kuwait and later in the UK. She left their employment some three months after their arrival in the UK. She commenced an action through the UK courts for alleged cruelty against her former employers. During the period of these proceedings, some four years, Mrs Haseena lived in the UK and nowhere else.

The Tribunal found that the facts in this case were most unusual. It held that usual place of residence referred to in the VAT Act 1994 was to be construed as giving effect to the place where he has his permanent address or usually resides in the 6t h VAT Directive (now the Principal VAT Directive). It considered that there must be a sufficient degree of permanence and not merely a temporary presence. It held that, in this case, there was insufficient degree of permanence in that

  • on arrival in the UK Mrs Haseena expected to stay only one month
  • if she had remained in her employers’ service and they had remained for the maximum permitted period, her visa was for only six months
  • when she left her employers, she was prohibited by immigration law from working
  • her entitlement to stay was initially not accepted by the Home Office
  • when she was allowed to stay, it was for a limited period and a limited purpose with no guarantee of extension even to pursue the litigation
  • during her period in the UK, she stayed in a series of hostels of temporary abode
  • correspondence with the Home Office showed that if the visa had not been extended, she would have returned to India, and

the case was distinguishable from USAA Ltd because Mrs Haseena’s stay was not voluntary.

Thus it held that, throughout the relevant period, India was the country where Mrs Haseena had her usual place of residence.

Corporate body

The usual place of residence of a corporate body is defined in section 9(6) of the VAT Act 1994 as the country where it is legally constituted. We interpret this as the country in which its registered office is located, and this view was accepted by the VAT Tribunal in the case of Chantrey Vellacott (LON/91/1718X), [1992] VATTR 138, (VTD 16610).