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HMRC internal manual

VAT Place of Supply of Services

Reverse charge: input tax, partial exemption, groups

Input Tax

If a non-UK trader is not registered in the UK, but makes supplies on which the customer accounts for VAT under the reverse charge procedure, the non-UK supplier can reclaim UK VAT relating to those supplies by means of the refund system set up under the Eighth and Thirteenth Directives (for EC and non-EC traders respectively). This is described in

  • Notice 723: Refunds of VAT in the EC for EC and non-EC businesses - UNTIL 31ST DECEMBER 2009 and
  • Notice 723A: Refunds of VAT in the European Community for EC and non-EC businesses - FROM 1ST JANUARY 2010.

Partial Exemption

Section 8(3) of the VAT Act 1994 provides that supplies of services which are treated as made by the recipient for reverse charge purposes are not to be taken into account as supplies for the purposes of determining any allowance of input tax under the partial exemption rules.

You can find more on this in the PE - VAT Partial Exemption Guidance (PE) : Partial exemption guidance and in Notice 706: Partial exemption.


The disregard provisions for inter-company group transactions are currently under review.