Freight transport: Place of Supply from 1 January 2010: recipient in business
Customer in business
From 1 January 2010 the place of supply of most services (including transportation and ancilliary services) to a customer that is in business (a relevant business person) for the purposes of receiving the supply is where the customer belongs- this is called the ‘general rule’. It is not material whether the customer belongs in the UK, the EC or another country nor where the services are physically performed nor whether the customer is VAT registered or not. The VAT Place of Supply of Services manual gives detailed guidance as to how this works and what evidence may be required.
With effect from 15 March 2010 HMRC introduced a temporary administrative easement in relation to business to business (B2B) supplies of freight transport (or services closely associated with freight transport) which are physically performed wholly outside the EU. This was announced in a Revenue & Customs Brief. For details of the easement please go to VATPOSTR3650
UK supplier to UK business customer
Where a UK supplier supplies freight transport or related services in respect of a movement of goods anywhere in the world to a UK business customer, the service is supplied in the UK VAT is accounted for in the normal way.
For example a UK supplier transports goods for a UK registered customer from the UK to France, from France to UK, or from France to Belgium. In each case the supply is made in the UK and VAT is charged in the normal way by the supplier.
UK supplier to EC business customer
Where a UK supplier supplies freight transport or related services to a business customer in another Member State, the supply is made in the customer’s Member State. The UK supplier does not charge VAT as the supply is outside the scope of UK VAT, and the customer is required to account for any VAT due to the authorities of their own Member State using the reverse charge procedure.
For example, a UK supplier transports goods for a business customer registered for VAT in France: from UK to France, from France to UK, from France to Belgium and from Italy to France. In each case the supply is made in France, the UK supplier does not charge VAT and the customer accounts for French VAT using the reverse charge procedure.
Non-UK supplier to UK business customer
When a UK business customer receives supplies of freight transport or related services from a supplier who belongs outside the UK (elsewhere in the EC or outside the EC), the supply takes place in the UK and the UK recipient of the services must account for VAT using the reverse charge procedure. If the recipient is not VAT registered then the value of the supply received counts towards the registration threshold. Further information on this can be found in the guidance covering VAT registeration.