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HMRC internal manual

VAT Place of Supply of Services

From
HM Revenue & Customs
Updated
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Use and enjoyment: Introduction

The use and enjoyment rules apply to telecommunications services; broadcasting services; electronically supplied services (for business customers); hired goods; hired means of transport; and insurance repair services.

Effective use and enjoyment takes place where a recipient actually consumes services irrespective of the contractual arrangements, payment or beneficial interest. This additional provision corrects instances of distortion which remain as a result of considering only where the provider and the customer belong. It would be distortive, for example for supplies such as telecommunications services, that are actually consumed outside the EC, to be subject to UK VAT. Equally, it would be distortive for there to be no EC VAT on such services where they are consumed in this country.

Effective use and enjoyment is only a consideration when certain services made by a UK provider are consumed outside the EC or those services when supplied by a non-EC provider are consumed in the UK. When services are provided by an EC supplier and consumed in the UK, or provided by a UK supplier and consumed in another EC country, this provision will not apply.

For example, the place of supply of telecommunications services is where they are used and enjoyed when supplied

  • by a UK provider to a UK customer or a non-business customer in another Member State, to the extent that effective use and enjoyment takes place outside the EC (such element being outside the scope of VAT), or
  • by a non-EC provider to a UK customer or a non-business customer in another Member State, to the extent that effective use and enjoyment takes place in the UK (such element being subject to UK VAT).