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HMRC internal manual

VAT Place of Supply of Services

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HM Revenue & Customs
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Establishment making or receiving the supply: Tribunals and other decided cases

There have been several Tribunal cases which have considered at which establishment a recipient received services.

In the cases of Binder Hamlyn (EDN/82/55), [1983] VATTR 171, (VTD 1439) and Vincent Consultants (LON/88/254), [1988] VATTR 151, (VTD 3091) the Tribunal found that the registered office in the UK of companies which traded abroad was the establishment at which or for the purposes of which accountancy and consultancy services concerning UK company law requirements were most directly used.

In two cases brought by Strollmoor Ltd (LON/89/1506X and LON/94/632A) (VTD 5454) and (VTD 12765) the Tribunal came to the same decision regarding property management and accountancy services by a UK supplier in respect of properties located in the UK owned by investment companies with offices in both the UK and Monaco. The management services and so on, were ruled to be received for the purposes of the UK establishment.

In Omnicom (UK) PLC (LON/93/2441)/Diversified Agency Services Ltd (CO/2750/94) the Tribunal and the High Court considered the place of belonging of the Spanish Tourist Board, Turespaña. Omnicom was a UK based advertising agency supplying advertising services, promoting tourism in Spain, to Turespaña which had offices in London and in Spain. The London office dealt with the day to day operation of the contracts and paid the supplier with funds forwarded from Spain, but the Tribunal held that real management of the contracts and creative artwork and so on, was carried out by the head office in Madrid, so that the services supplied by Omnicom were most directly used by the establishment in Spain.

However, the services were found to be supplied in the UK because Turespaña was an EC state authority, and the services were not supplied for the purposes of a business (Turespaña was not a taxable person in the words of the Sixth VAT Directive).

The treatment of supplies of accountancy services carried out in relation to UK statutory requirements are explained in Binder Hamlyn (EDN/82/55) and Vincent Consultants (LON/88/254) mentioned above. See also Andrew Marks T/A Marks Cameron Davies & Co (LON/ 95/1773) (VTD 15541).

The case of Omnicom (UK) PLC (LON/93/2441)/Diversified Agency Services Ltd (CO/2750/94) above gives authority for approaching the question as follows

  • which establishment has authority to make contracts?
  • which establishment has authority to take decisions concerning the contracted services?
  • which establishment prepares or makes other decisions, for example about the artwork or other creative work used in the campaign?
  • which establishment actually uses the services?

There has been confusion as to whether a company which has established its business overseas can receive advertising services in the UK at its UK fixed establishment, created by its associated or subsidiary company. In general, the UK fixed establishment will receive the services when

  • the supply of advertising services are in respect of a UK campaign only and do not include any wider international campaign
  • the UK fixed establishment takes decisions concerning the work performed under contract
  • in particular, the UK fixed establishment prepares or makes decisions about the artwork or other creative work used in the campaign, and
  • the overseas business establishment has no involvement with the supply or its role is subservient to the fixed establishment.