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HMRC internal manual

VAT Single Market

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HM Revenue & Customs
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Simplifications: installed and assembled goods: arrangements

Background

The simplification arrangements for supplies of goods installed or assembled in the UK are set out in section 14 (2) and (3) of the VAT Act 1994 (see VATSM5120). They are available to any supplier who is registered for VAT in another Member State (and who is not required to be registered in the UK for any other reason) and where the supply is to a VAT registered customer in the UK.

The practical effect is that the customer is treated as making an acquisition of the goods in the UK and so must account for acquisition VAT on the full value of the supply, rather than just the components.

Procedure for the supplier

Regulation 19 of the VAT Regulations 1995 (see VATSM5130) sets out the procedural requirements. The regulation is made under the powers contained in section 14(3) of the VAT Act 1994 (see VATSM5120).

In order to use the simplified arrangements a non UK supplier is required to notify the Non Established Taxable Persons Unit (NETPU) at Aberdeen and provide

  • their name, address and EC VAT registration number
  • the name, address and VAT registration number of the UK customer, and
  • the date on which installation or assembly of the goods began, or will begin.

Separate notifications are required for each customer and should reach NETPU no later than the date of issue of the first invoice (in accordance with the requirements described below) to the customer concerned. Additional notifications are not required in the event of further supplies to the same customer. A copy of the notification should also be sent to the customer in the UK telling them that the simplified arrangements are being used. The supplier should retain a copy of each notification.

The supplier is also required to issue the customer with an invoice on which adoption of the simplification arrangements is indicated. The invoice must be issued within 15 days of the date on which the supply would otherwise have taken place under the normal UK tax point rules. These might include receipt of a payment, or completion of the installation or assembly.

Action by the UK customer

Use of the simplified arrangements by the supplier is subject to the UK customer being registered for VAT in the UK. The UK customer will receive a copy of the NETPU notification and should treat the purchase as an acquisition in the normal way - accounting for acquisition VAT on the full value of the supply. The time of acquisition is the date of issue of the invoice by the supplier.

Goods sourced from outside the EC

The simplification is not restricted to goods arriving in the UK from another Member State. If the supplier imports goods into the UK from outside the EC they will be able to obtain a refund of the import VAT under the 8th Directive refund scheme. Alternatively, they may arrange for their customer to import the goods. In this case, the customer may claim the import VAT as their input tax subject to the normal rules.