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18 February 2021
Private Client & Offshore Services United Kingdom
Post-Brexit position
Example
Takeaways for suppliers
It is often easy to assume that only parties which live in the United Kingdom are required to pay UK value added tax (VAT). However, UK VAT is often paid by individuals, trustees and companies which are resident outside the United Kingdom but use the services of professionals which are based in the United Kingdom. The extent to which VAT is or is not chargeable has changed as a result of Brexit and the end of the transition period on 31 December 2020. This article considers the new post-Brexit VAT position.
From a UK supplier's perspective, an EU customer is now treated in much the same way as a customer in the United States or another non-EU country. In summary, this means that supplies to business customers, subject to various exceptions, continue not to attract VAT. There is even better news for EU non-business customers in that services from UK professionals will no longer attract VAT (subject to various exceptions – most noticeably, UK land-related services).
By way of an example, Mrs Jones is a senior banking executive who has been living in Frankfurt since June 2016 and owns the following UK assets:
Mrs Jones is tired of subsidising her son and wants to see him married off.
She incurs a number of professional fees in relation to the above and is pleasantly surprised that one of the invoices from her UK tax adviser for submission of her January tax return is not subject to VAT.
A summary of the possible VAT invoices issued on or before 31 December 2020 and on or after 1 January 2021, in respect of the professional services which Mrs Jones has used, is shown below.
Description of service (all suppliers are UK based) |
31 December 2020 |
1 January 2021 |
Comment |
Advice by property consultants to Jones Ltd regarding feasibility of buying property in the United Kingdom |
No UK VAT |
No UK VAT |
The general business-to-business (B2B) rule is that the supply takes place where the |
Advice by architects to Immobilen GmbH regarding feasibility of using a sustainable earth house construction technique in respect of a specific site in Cornwall |
UK VAT |
UK VAT |
The B2B rule displaced as the service |
Property investment portfolio advice to Immobilen GmbH |
No UK VAT |
No UK VAT |
The B2B rule applies as the service only |
Fees charged to Mrs Jones for obtaining planning consent in the Lake District |
UK VAT |
UK VAT |
The general business-to-customer (B2C) rule (ie, that the place of supply is where the supplier belongs) applies. |
Accounting and tax advice charged to Mrs Jones's son who lives in the United States |
No UK VAT |
No UK VAT |
The general B2C rule is altered for recipients |
Accounting and tax advice charged to Mrs Jones |
UK VAT |
No UK VAT |
As of 1 January 2021 the general B2C rule |
Matchmaking services to Mrs Jones in respect of her son |
UK VAT |
UK VAT |
This is a B2C service which is neither a |
Individuals living in the European Union may be more likely to query their UK VAT invoices, so suppliers must think carefully and ask themselves certain key questions:
For further information on this topic please contact Elizabeth Small at Forsters LLP by telephone (+44 20 7863 833) or email (elizabeth.small@forsters.co.uk). The Forsters LLP website can be accessed at www.forsters.co.uk.
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