Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

VAT Place of Supply of Services

From
HM Revenue & Customs
Updated
, see all updates

Use and enjoyment: Telecommunication services

Where telecommunications services are supplied by a business to another business, which use those services to supply its own customers, each supply must be looked at separately for place of supply purposes. At the same time it is important to remember that in determining whether the use and enjoyment provisions apply, you are looking to any use and enjoyment by the customer and not by the customer’s customer.

Example 1

A UK telecommunications provider supplies telecommunications services to a telecommunications provider that belongs in the USA. The USA provider then supplies those services to a UK private customer. The USA provider receives the services in the USA and so the supply to the USA provider is outside the scope of UK and EC VAT. Those services are not used and enjoyed in the UK by the USA provider. However, the USA provider’s onward supply is used and enjoyed by its UK private customer therefore the USA provider must register for VAT in the UK, subject to the normal registration rules.

Example 2

A UK telecommunications provider supplies telecommunications services to a telecommunications provider that belongs in the USA. The USA provider then re-supplies those services to its UK business customer. The USA provider receives the services in the USA and so they are outside the scope of UK and EC VAT. Those services are not used and enjoyed in the UK by the USA provider. The USA provider’s onward supply is received by its UK business customer who accounts for VAT using the reverse charge procedure.

Example 3

A UK telecommunications provider supplies telecommunications services to a telecommunications provider that belongs in the USA. The USA provider then re-supplies those services to a USA business customer and that USA business customer partly uses that supply at its UK branch. The USA provider receives the services in the USA and so they are outside the scope of UK and EC VAT. Those services are not used and enjoyed in the UK by the USA provider. The USA provider’s onward supply is received by its USA business customer and is also outside the scope. However, to the extent it is used and enjoyed in the UK, the UK branch accounts for VAT using the reverse charge procedure.

Telecommunications services supplied to travellers

Under these rules any telecommunications services used in the UK by customers belonging outside the EC are supplied in the UK. Telecommunications services are therefore subject to UK VAT when used in the UK by non-EC visitors. As an administrative measure HMRC will not seek to tax elements of telecommunications services used in the UK which are

  • simply an incidental part of an established telephone contract or account held by a customer who belongs outside the EC
  • used by a non EC temporary visitor, and
  • HMRC are satisfied these conditions are not being abused.