Comprehensive guide on the VAT liability of private hire / taxi services provided to the general public including a look at the principal and agent operating models. Introduction The provision of taxi services to the public is chargeable at the standard rate of VAT 20%. Taxi services comprise of: Drivers who own or rent vehicles to provide taxi services to the public Companies that provide taxi services to the public by either using their own fleet of vericles or use drivers who operate on a sub contract basis. Drivers who own or rent vehicles to provide taxi services Drivers that use their own or rented vehicles to provide taxi services to the general public are doing so as self employed taxi drivers. Drivers must register for VAT where they they exceed or intend to exceed the VAT registration threshold of £85,000 Standard Rated VAT 20% VAT is applicable on these taxi services as follows: Taxi journeys provided to the public (including waiting time) Any additional charges for baggage Services provided to other taxi firms on a contract basis Note: Working for a taxi firm on an employed basis (as an employee) is not classed as being in business providing taxi services. The company employing the taxi driver(s) is providing taxi services for VAT purposes. Companies that provide taxi or private hire services Companies that provide taxi or private hire services to the general public using either employed or subcontracted drivers are providing vatable services and should charge 20% VAT. These services are either provided to customers who pay cash directly to the driver or to account holders who use private hire firms such as Addison Lee or UBER. Services that they provide where standard rated VAT 20% is applicable are as follows: Taxi or private hire journeys provided by the company to the general public (individuals or companies etc) by drivers employed by the company Taxi or private hire journeys provided to the general public (individuals or companies etc) using subcontracted drivers or companies Taxi Journeys provided by the Owner, Director, Partner to the general public (individuals or companies) using the companies vehicles or their own. Referral fees received from taxi drivers or firms for passing business to them Note: VAT should be applied to the full fare collected from the customer before any deductions made from amounts payable to subcontracted drivers or companies. (For example where you charge them for use of equipment such as radios, satnavs etc.) Also VAT invoices or receipts should be provided to customers who request or require one. UBER vs HMRC - Note Uber was assessed for almost £400M by HMRC in 2023 for VAT in relation to VAT which HMRC argues is underpaid for historical fare rides where VAT was not charged by UBER. UBER are challenging this assessment. See link to Tax Policy Associates Article. Exclusive report: HMRC pursuing Uber for another £386m of VAT – Tax Policy Associates Ltd . Also see BOLT case below in Dec 2023 which may help UBER's case when heard in 2024. BOLT vs HMRC - Note BOLT recently won a tax tribunal case in London where it argued that it should only pay VAT to HMRC on the margin (difference between what it receives and pays to drivers) based on the Tour Operators Margin Scheme. HMRC have since been granted the right to appeal the decision. March 2025 - UTT (upper tribunal) Bolt has successfully defended its case against HMRC and the UT has agreed with the FTT in that Bolt can use the TOMS for VAT on ride hailing services. May 2025 - HMRC - have paused collecting assessed VAT on the full Value of rides on its platform following the success of the bolt case above. HMRC - Granted permission to appeal at the Court of Appeal (May / June 2026) Veezu and Delta Taxis - The Court of Appeal overturned the High Court’s earlier decision brought by UBER where it argued that VAT should be applicable to Taxi fares. This now means taxi firms in England and Wales – outside of London – will not be forced to apply VAT onto their fares. The ruling will not impact Uber, who will continue to charge VAT on fares, but will mean many smaller firms can continue to operate as they have previously. (Source City AM) UBER - July 2025 - Has lost its Supreme Court appeal on the above where it sought to overturn the above High Court decision that rival taxi firms outside of London do not have to charge 20% VAT on their rides. Business Structure of Companies that provide Taxi or Private Hire Services Principal or Agency Model where taxi or private hire firms use subcontracted drivers, they can either act in the capacity of Principal or as an agent to the drivers. Acting as Principal Where taxi or private hire firms provide services to the general public as principal using subcontracted drivers, the services are being provided by the firm itself and it must account to HMRC for VAT at 20% on the full fare charged to the customer. Acting as Agent Where taxi or private hire firms provide services to the general public acting as agent for self employed drivers or other companies, it means the actual supply of transport services is between the self employed driver and the customer riding the taxi. The Taxi firm acting as agent will normally: Inform the drivers of customer bookings and location Collect cash on behalf of the drivers where bookings are made by account holders. Invoice the drivers for their agency fee and charges for car and radio hire plus 20% VAT Invoice account holder customers (including 20% VAT) for an admin charge which should be shown as a separate line on the total invoice for transportation services provided Note: VAT should only be billed and collected from account holders where the driver is registered for VAT Using the Principal Model and the Agency Model A company can use both the principal model and agency model for account holders and cash customers respectively provided there are properly drafted contractual agreements and terms with drivers and companies and there are genuine differences between the two sides of the business. Taxi Associations Taxi Associations are companies that are set up by a group(s) of taxi drivers to: Facilitate the allocation of customer orders among its members provide a central control room for handling and allocating jobs provide standard equipment such as radios, satnavs etc to members Taxi Associations must register for VAT where their services billed exceed the VAT Registration threshold of £85,000 -Contains public sector information licensed under the Open Government Licence v3.0. Taxi Services and VAT

Comprehnsive guide for the different VAT rates applicable to various goods and services in the UK, including Health, Transport, Land & Buildings, Education, Charities etc. VAT Rates For Goods & Services Food and Drink Food and drink for human consumption is usually zero-rated but some items are always standard-rated. These include: catering alcoholic drinks confectionery crisps and savoury snacks hot food sports drinks hot takeaways ice cream soft drinks and mineral water Restaurants must always charge VAT on everything eaten either on their premises or in communal areas designated for their customers to use, such as shared tables in a shopping centre or airport food courts. In addition, restaurants and takeaway vendors must charge VAT on all hot takeaways and home deliveries, but do not need to charge VAT on cold takeaway food unless it’s to be eaten in a designated area. Animals and animal food Supplies of live animals that are zero-rated You can zero rate the sale, hire or loan or supply of a part interest (a share) of a live animal provided it’s of a kind generally used in the UK, or yielding or producing food for human consumption. Animal includes bird, fish, crustacean and mollusc. Examples of Zero Rated Animals are: meat animals dairy animals poultry (except ornamental breeds), including those for egg production, honey bees fish (except ornamental breeds and coarse fish), including those for production of edible roes Animals that are standard-rated Examples of standard-rated animals are: bumble bees ornamental birds and fish racing pigeons horses Live kangaroos Pets Animals that will be kept as pets can be zero-rated only if they are of a kind that is normally used for human food production. For example, rabbits, other than ornamental breeds, are always zero-rated. Animals kept for non-food purposes Animals kept for non-food purposes can be zero-rated if they are of a kind normally producing food for human consumption. Sheep kept mainly for their wool, or bulls used for breeding are zero-rated. Birds Most breeds of chicken are zero-rated, as are game birds and ostriches. Ornamental breeds of birds are standard-rated. The following breeds of ducks, geese and turkeys are zero-rated: Type of fowl Breed Ducks - Aylesbury, Campbell (Khaki Campbell), Indian Runner, Muscovy, Pekin and derivatives and crossbreeds of these Geese - Brecon Buff, Chinese Commercial, Embdem, Roman, Toulouse and derivatives and crossbreeds of these Turkeys - Beltsville White, British White, Broadbreasted White, Bronze (Broadbreasted Bronze), Norfolk Black and derivatives and crossbreeds of these Fish Freshwater fish - Eels, salmon and trout and others recognised as food for human consumption are zero rated. Bream, perch, pike, carp and tench are standard rated. Shellfish - Oysters, mussels, whelks are zero rated while non food species are standard rated Fish for aquaria -All supplies are standard rated Fish used as bait - Fish of a kind, and fit for, human consumption are zero rated and all other supplies are standard rated. Ornamental fish - for example koi carp Agricultural and horticultural crops Crops covered by the relief All crops that are specifically grown to produce food of a kind for human consumption or animal feeding stuffs are zero-rated. The zero rate also applies to seeds, seedlings, crowns, spores, tubers and bulbs of edible vegetables and fruit. What’s not covered by the relief Any crop that generally produces items that are not fed to humans or animals is always standard-rated. Plants that are primarily grown for their ornamental effect (such as ornamental nursery stock including trees, shrubs, herbaceous plants, alpines and pot plants) are standard-rated. Plants, seeds and fruit of a kind used for the production of perfumes, pharmaceutical products, insecticides, fungicides and other non-food uses are standard-rated. Some examples of plants that are standard-rated are: Evening primrose, because this is grown for the extraction of its oil Tulips and Hyacinths, because these are grown and sold for ornamental purposes Norfolk reed, because this is grown for thatching material Sport, leisure, culture and antiques Betting and gaming — including pool betting and games of chance is Exempt from VAT Bingo — including remote games played on the internet, telephone, television or radio is Exempt from VAT Bingo — including remote games played on the internet, telephone, television or radio is Exempt from VAT Lottery ticket sales is Exempt from VAT Online lottery games is exempt from VAT Retailer commission on lottery ticket sales is Exempt from VAT Culture Admission charges by public authorities or eligible cultural bodies to certain cultural events such as visits to museums, art exhibitions, zoos and performances is Exempt from VAT Antiques Antiques, works of art or similar (as assets of historic houses) sold by private treaty to public collections are exempt from VAT Antiques, works of art or similar (as assets of historic houses) used to settle a tax or estate duty debt with HMRC again are exempt from VAT Health, education, welfare and charities Charities Admission charges by charities are Exempt from VAT Advertising services for charities VAT are zero rated Certain goods sold at charitable fundraising events are zero rated Charitable fundraising events are Exempt from VAT Charity shops — selling donated goods is zero rated for VAT Construction and sale of new buildings for a relevant charitable purpose are zero rated for VAT Energy-saving materials permanently installed in dwellings and buildings used for a relevant residential purpose providing the total cost of them (not including VAT) is not over 60% of the cost of the installation of the products (not including VAT) 5% reduced rate VAT applies. Energy-saving materials — supply only — are Standard-Rated (20%) Sponsored charitable events are Exempt from VAT. Voluntary donations to charities are outside the scope of VAT Welfare Building services for disabled people are zero rated for VAT Burial or cremation of dead people, or burial at sea is Exempt from VAT Mobility aids for the elderly, 5% reduced rate VAT applies Equipment for blind or partially sighted people is zero rated Equipment for disabled people is zero rated for VAT Funeral plans written under contracts of insurance are Exempt from VAT Smoking cessation products — nicotine patches and gum, 5% reduced rate VAT applies Welfare services provided by charities at significantly below cost are Outside the scope of VAT Magnetic tape adapted for recording speech for blind people together with apparatus for making and playing the adapted tape and certain low vision aids are zero rated. Health Care or medical treatment provided by a qualifying institution like a hospital, hospice or nursing home are Exempt Dispensing of prescriptions by a registered pharmacist is zero rated for VAT Health services provided by registered doctors, dentists, opticians, pharmacists and other health professionals is Exempt from VAT Incontinence products are zero rated. Maternity pads are zero rated Sanitary protection products are zero rated Low vision aids are zero rated Education Education and vocational training provided by an eligible body other than a ‘private school’. Goods or services closely connected to the education provided by an eligible body like a school, college or university is Exempt from VAT. VAT Notice 701/30 Building and construction Substantial reconstructions to protected buildings that are buildings used as a dwelling, for a relevant residential purpose or for a relevant charitable purpose is zero rated VAT Notice 708 The installation of a bathroom or lavatory, constructing ramps and widening doorways or passageways for disabled people in their own home is zero rated Building services for disabled people Construction and first freehold or long leasehold sale of a new building for a relevant charitable purpose is zero rated. VAT Notice 708 Construction and first freehold or long leasehold sale of a new building for relevant residential purposes is zero rated. VAT Notice 708 Construction and first freehold or long leasehold sale of new domestic buildings is zero rated. VAT Notice 708 Converting existing premises by increasing the number of dwellings within the building, 5% VAT applies. VAT Notice 708 Renovating a dwelling that has been empty for at least 2 years 5% VAT applies. VAT Notice 708 First freehold or long leasehold sale of a commercial building converted into a dwelling or dwellings is zero rated. VAT Notice 708 First freehold or long leasehold sale of buildings converted for relevant residential purposes is zero rated. VAT Notice 708 First freehold or long leasehold sale of buildings converted for relevant charitable purposes is zero rated. VAT Notice 708 Land and property Garages or parking spaces let together with dwellings (under short hold tenancy agreements) for permanent residential use are Exempt from VAT. — VAT Notice 742 Parking — grant, or licence, to occupy land on which incidental parking takes place is Exempt from VAT. VAT Notice 742 Property, land and buildings — grant, or licence, to occupy land or buildings is Exempt from VAT. VAT Notice 742 Sale or long lease of a new dwelling with garage or parking space is zero rated for VAT. VAT Notice 708 Transport, freight, travel and vehicles Transport Aircraft repair and maintenance is zero rated for VAT. VAT Notice 744C Travel Houseboat moorings are Exempt from VAT. VAT Notice 742 Parking spaces or garages supplied with houseboat moorings are Exempt from VAT. VAT Notice 742 Passenger transport in a vehicle, boat or aircraft that carries not less than 10 passengers is zero rated for VAT. VAT Notice 744A Tolls for bridges, tunnels and roads operated by public authorities is Outside the scope of VAT. Privately-operated tolls for bridges, tunnels and roads are standard-rated — VAT Notice 700 Freight Freight transport to or from a place outside the UK is zero rated for VAT. Domestic freight transport is standard-rated, unless it is the domestic leg of freight transport between the UK and another country in which it is zero rated. — VAT Notice 744B Freight containers — sale, lease or hire to a place outside the UK and the EU is zero rated. VAT Notice 703/1 International freight transport that takes place in the UK and its territorial waters is zero rated. VAT Notice 744B Vehicles Aircraft repair and maintenance is zero rated. VAT Notice 744C Airships — sale or charter is zero rated. VAT Notice 744C Caravans (more than 7 metres long or more than 2.55 metres wide) is zero rated or 5%. Taxing holiday caravans Civil aeroplanes — sale or charter is zero rated for VAT. Gliders — sale or charter — are standard-rated as are hot air balloons — VAT Notice 744C Helicopters — sale or charter is zero rated for VAT. VAT Notice 744C Houseboats — sale or let out on hire is zero rated for VAT, But holiday accommodation let in a moored houseboat is standard-rated — VAT Notice 701/20 Military aeroplanes — sale or charter is zero rated for VAT. VAT Notice 744C Ship repairs and maintenance is zero rated for VAT. VAT Notice 744C Shipbuilding — 15 tons or over gross tonnage is zero rated for VAT. VAT Notice 744C Printing, postage, publications — books, magazines and newspapers Printing Brochures is zero rated for VAT. VAT Notice 701/10 Leaflets is zero rated for VAT. VAT Notice 701/10 Pamphlets is zero rated for VAT. VAT Notice 701/10 Postage Direct-mail postal services meeting all the conditions of VAT Notice 700/24 3.2 and 3.3 are Outside the scope of VAT. VAT Notice 700/24 Postage, packing and delivery within the UK included in the sales contract but charged for separately, for example, mail order The same rate as the goods being delivered or posted Postage, packing and delivery within the UK charged as an optional extra is always standard-rated — VAT Notice 700/24 Public postal services provided by the Royal Mail under a universal service obligation are Exempt from VAT. Standard Royal Mail first and second class services for example Other postal services that are not subject to a universal service obligation are Standard-Rated (20%) Supplies that are not subject to regulation Publications Books are zero rated for VAT. VAT Notice 701/10 Children’s painting and picture books are zero rated for VAT. VAT Notice 701/10 Maps and charts are zero rated for VAT. VAT Notice 701/10 Magazines are zero rated for VAT. VAT Notice 701/10 Newspapers are zero rated for VAT. VAT Notice 701/10 Printed or copied music are zero rated for VAT. VAT Notice 701/10 Publications are zero rated for VAT. Some items are standard-rated such as exercise books, letterheads, posters — VAT Notice 701/10 Clothing and footwear, protective and safety equipment Clothing and footwear Babywear is zero rated for VAT. VAT Notice 714 Children’s clothes and footwear is zero rated for VAT. VAT Notice 714 Protective and safety equipment Carrycots with restraint straps, 5% VAT applies. VAT Notice 701/23 Children’s car seats, booster seats and booster cushions , 5% VAT applies. VAT Notice 701/23 Children’s safety seats with bare wheeled framework, 5% VAT applies. Prams and pushchairs are standard-rated (20%) — VAT Notice 701/23 Cycle helmets — CE marked are zero rated for VAT. VAT Notice 701/23 Motorcycle helmets that meet safety standards are zero rated for VAT. VAT Notice 701/23 Protective boots and helmets for industrial use are zero rated for VAT. VAT Notice 701/23 Open Government Licence v3.0

Comprehensive guide on Canada GST, PST and HST and how it is applied in Canada including registration thresholds, who is required to register and rates for GST, PST & HST by province. Canada GST Guide - Comprehensive guide for GST in Canada Introduction T he Canadian Tax Authority is know as the Canada Revenue Agency (CRA) and is responsible for administering General Sales Tax (GST) and Harmonized Sale Tax (HST). The Federal GST rate of 5% is applicable across all provinces and territories and where a province has what is known as a Provincial Sales Tax (PST) and it is combined with GST, then this is known as Harmonized Sales Tax (HST). However some provinces have a separate Provincial Sale Tax (PST) that is levied alongside GST. General Services Tax (GST) and Harmonized Sales Tax (HST) are consumption taxes levied on most property and services in Canada. G ST / HST Rates Provinces with 5% GST Alberta British Columbia + 7% PST Manitoba + 7% PST Northwest Territories Nunavut Quebec Saskatchewan + 6% PST Yukon Provinces with HST 13% (HST) in Ontario 14% (HST) in Nova Scotia 15% (HST) in New Brunswick 15% (HST) in Newfoundland and Labrador 15% (HST) in Prince Edward Island When Do you Have to Register for GST / HST Businesses - who's total worldwide taxable supplies (including zero rated supplies) are above CAD $30,000 (CAD $50,000 for public service bodies) in a single calendar quarter or in total over the last 4 consecutive calendar quarters or less (but not in a single calendar quarter) will be required to register for Goods and Services Tax (GST) / Harmonized Sales Tax (HST). Worldwide Taxable supplies should exclude revenues from supplies of Financial Services, Sales of Capital Property and goodwill from the sale of a business. Note: Voluntary Registration is also allowed where businesses (small suppliers) do not exceed this threshold but wish to claim GST / HST input tax credits from the CRA on purchases they have made such as: Business start-up costs Business-use-of-home expenses Delivery and freight charges Fuel costs Legal, accounting, and other professional fees Maintenance and repairs Meals and entertainment (allowable part only) Motor vehicle expenses Office expenses Rent Telephone and utilities Travel Charities and Public Institutions - will also be considered as small suppliers if they meet the CRA's gross revenue test of $250,000 or less. For more information on what constitutes a charity or public institution, please see the link to the CRA website GST/HST Memorandum 2-2, Small suppliers . Taxi Operators / Commercial Ride Sharing Driver - Self-employed taxi drivers or commercial ride-sharing drivers, have to register for the GST/HST even if they are a small suppliers and the effective date of registration is the day they start supplying taxable passenger transportation services. Non Resident Businesses - that do not have a permanent establishment (fixed place of business) in Canada may be required to register for GST / HST if they: Make supplies of Cross-border digital products and services Make supplies of Goods located in Canada Make supplies of Platform-Based Short-Term Accommodation Make supplies of Taxable goods or services, leases, or other supplies (including zero-rated supplies) in Canada in the course of carrying on business activity in Canada. Make supplies of Books, newspapers, magazines, periodicals, or similar printed publications in Canada or you offer such goods for sale in Canada, either through an employee or agent, or by means of advertising directed at the Canadian market, and send the publications by mail or courier to the recipient at an address in Canada. Sponsor (host) a convention in Canada and more than 25% of the attendees are residents of Canada. (Mandatory registration for GST / HST) Make taxable sales, leases, or other supplies (including zero-rated supplies) of admissions in Canada for a place of amusement, a seminar, an activity, or an event held in Canada. (Mandatory registration for GST / HST) Source CRA Effective Date of GST / HST Registration The effective date of registration is the day of the supply that made a business exceed $30,000 and GST / HST must be applied to that supply. Mandatory Electronic Filing of GST / HST Returns From 2024, all Businesses registered for GST / HST are required to file their returns electronically unless they are: A Charity Selected Listed Financial Institutions Other useful links can be found on the CRA website below Building and Construction GST / HST Builders and construction Non Resident Digital Platform Businesses GST / HST Non-resident digital-economy businesses Listed Financial Institutions GST / HST GST/HST Notice 265, GST/HST Registration for Listed Financial Institutions (including Selected Listed Financial Institutions) .

Summary of VAT changes and new policies in the Chancellors Autumn Budget 2025 and likely impacts including VAT, Corp Tax, Property, Savings, Dividends, Energy and more. UK Autumn Budget VAT & Tax Update - 2025 Autumn Budget Summary The Chancellor Rachel Reeves delivered her Autumn budget today Wednesday 26th November and the key VAT and Tax Changes are outlined below. VAT Changes In the Autumn Budget, it was confirmed that Electronic Invoicing (e-invoicing) will be mandatory for all business to business (B2B) and business to government(B2G)invoicing with VAT from 1 April 2029. Further details including a road map will be published in the 2026 budget. The introduction of e invoicing will deliver many efficiencies to businesses but will require planning and resources to ensure systems are up to date and compliant for the exchange of invoices electronically in the required format. For more information on what e-invoicing is and the different models that underpin it including the associated efficiencies and benefits , please see our e-invoicing news page. Please also see the updated consultation document link below following the Autumn budget announcement. Promoting electronic invoicing across UK businesses and ... VAT on Taxi or Ride Hailing Companies - Such as Uber or Bolt will no longer be able to apply the tour operators margin scheme and charge VAT only on their margins (How much they charge drivers or commission) and will have to apply VAT to the full ride sales value from 2 January 2026. Pension Salary Sacrifice Salary sacrifice is when you agree to reduce your gross salary or sacrifice a bonus and, in return, your employer pays the same amount into your pension. under current rules, these contributions are exempt from national insurance. However from 1 April 2029, this exemption will be capped at £2,000 meaning that payments under such schemes above this level will then attract employees and employers national insurance. Note: - These contributions into employer pension schemes will continue to be exempt from income tax subject to the normal limits. For more information please see the link to HMRC guidance. Changes to salary sacrifice for pensions from April 2029 Cash ISA's Also announced in the Autumn budget that from April 2027, the amount of cash you can pay into a cash ISA annually will be reduced from the current level of £20,000 down to £12,000 unless you are above 65 years of age. However the overall ISA allowance will remain at £20,000 which means the other £8,000 can only be used for investments. (Unless over 65) The aim here was to create and encourage more investments in the UK. Savings, Dividends and Property Income The government is raising rates of tax on property, savings and dividend income to ensure income from assets is taxed more fairly on the basis that property, savings or dividend income does not attract national insurance and as such individuals with such income pay less tax than those whose income comes from employment or self-employment. The increase in tax on property, savings and dividend income will help to narrow this gap. Tax on dividend income will increase by 2 percentage points. The ordinary rate will rise from 8.75% to 10.75%, and the upper rate from 33.75% to 35.75% from April 2026. The additional rate will remain unchanged at 39.35%. Tax on savings income will increase by 2 percentage points across all bands. The basic rate will rise from 20% to 22%, the higher rate from 40% to 42%, and the additional rate from 45% to 47% from April 2027. Tax on Property to have individual rates (similar to tax on savings and dividends). From April 2027, the property basic rate will be 22%, the property higher rate will be 42% and the property additional rate will be 47%. Finance cost relief will be provided at the separate property basic rate (22%). For more information on the above changes, please see the attached HMRC guidance link. Changes to tax rates for property, savings & dividend income Corporation Tax Capital allowances allow businesses to write off the costs of capital assets, such as plant or machinery, against their taxable income. They take the place of commercial depreciation, which is not allowed for tax. Writing Down Allowances (WDA) which allows companies, sole traders and partnerships to deduct the cost of plant and machinery from their profits chargeable to corporation tax will be reduced from 18% to 14% from April 2026. New 40% First Year Allowance (FYA) - which will allow both companies and unincorporated businesses (from 1 January 2026) to deduct 40% of the cost of the main pool of plant and machinery upfront from profits in the first year. This new relief is specifically beneficial to unincorporated businesses and leasing providers who were previously not able to use the full expensing 100% FYA available to companies. Note - The existing 100% full expensing allowance available to companies will be available only up until March 2026 and then replaced by the new 40% FYA as outlined above. For more information on these changes, please refer to the HMRC guidance in this link. new first-year allowance and reducing main rate writing ... Energy An estimated £150 will be cut from annual household domestic energy bills by eliminating or reducing green levies which are usually rolled up in standing charges. This will be funded by the Government cutting the Renewable Obligation Scheme by funding 75% of it, leaving only 25% to be passed on to consumers and the scrapping of Energy Company Obligation (ECO) scheme which forced energy suppliers to fund home energy efficiency improvements such as insulation.

Read the latest European VAT news articles covering VAT in The Digital Age, E invoicing, Customs Reform etc, from multiple websites and sources updated 24/7 Europe VAT News Articles Europe VAT News Articles - Read the latest European VAT news articles from multiple websites and sources covering VAT in the Digital Age (VIDA), E invoicing , Customs Reform, Legislative Changes and much more. VAT Digital. Com Demystifying European VAT

Read our guide on when Intermediary services are covered by the Intermediary VAT Exemption, including what is an intermediary and the HMRC conditions to qualify for the Intermediary exemption. Introduction An intermediary is a supplier of an exempt service which Brings together a person seeking a Financial Service with a person who provides a Financial Service Stands between the parties to a contract and acts in an intermediary capacity, and Undertakes work preparatory to the completion of a contract for the provision of financial services, whether or not it is completed Financial Service Here a Financial Service in relation to intermediaries are those services that fall under the VAT Act 1994 Schedule 9, Group 1,2,3,4 and 6. Work Preparatory Work preparatory to the completion of a contract refers to work done of a specialised nature. This could include helping to set the terms of the contract or making representations on behalf of a client, but would not include work done of a general nature such as administrative or clerical formalities. Note: If you deal in Securities, Even though the issue of securities is not a supply for VAT purposes, the introduction of a person seeking to purchase securities and a person issuing securities (and visa versa) does not have to engage in any preparatory work for the transaction to be Exempt . Services not Covered by the Intermediary Exemption Advertising Market Research Promotional Services Product Design Credit Management for a person granting the credit Financial Investigations Corporate Finance (advisory) Financial Advice only to a client Financial Investigations on behalf of a client Note: Where financial advice results in a customer taking out a financial product where the advice is considered ancillary to the supply of the exempt intermediary service, then the whole supply will be Exempt. If the Financial advice far outweighs the introductory intermediary service, such as where the client has been given a complete financial review and advice, then the service will be standard rated 20%. VAT liability of Intermediary Supplies Intermediary Services supplied to UK customer = Exempt Intermediary Services supplied to Non UK customer = Outside the scope with recovery (Zero Rated) Input VAT Recovery in Relation to Intermediary Supplies Intermediary Services provided to a UK Client (Exempt) = no entitlement to input VAT recovery unless the underlying counter-party is located outside the UK Intermediary Services provided to a non UK client = Outside the Scope with Input VAT entitlement. -Contains public sector information licensed under the Open Government Licence v3.0. Intermediary Services & VAT - Guide on the Intermediary VAT Exemption

The page provides details of the VAT liability of the sale of Debt, Asset Purchases, Factoring, Asset Based Lending etc. Sale of Debt The sale of a debt is a financial transaction, whereby the purchaser acquires ownership of debts from a creditor, at a nominal sum to the face value of the debts. The purchaser assumes all the rights and obligations of the original creditor and all legal and beneficial or equitable interest passes to the buyer to whom full title and risk is transferred. The purchaser of a debt portfolio may either use an in-house operation to effect recovery or contract with one or more debt recovery agencies for use of their collections services as described in VATFIN3255. Depending on the contractual agreement with the original creditor, the purchaser may sell on all or part of the debts acquired. The purchaser of a debt portfolio has no right of recourse to the seller for un recovered debts except where debts are deemed to be irrecoverable prior to the date of purchase e.g. deceased customers. In some cases the sale contract may allow the purchaser to return these accounts and gain a return of the relevant purchase amount. Unless there is a charge-back agreement for unsupported balances, the purchaser does not return uncollected debts to the original creditor - the purchaser will write off the debts and take the loss. Debt purchase companies may also offer contingency debt collection services as described in VATFIN3255. In the sale of a debt, all legal and beneficial or equitable interest passes to the buyer to whom full title and risk is transferred. Assignment of a debt for purposes of this guidance we distinguish the assignment of a debt from a sale of a debt, in that with an assignment only the equitable interest is passed to the assignee and the assignor retains the legal interest in the debt and any liability to obligations arising from the original contract. Often it will not be possible for the assignee to sell that which has been assigned. The use of the term ‘assignment’ can cause misunderstanding and it is essential to be quite clear as to what is actually happening in any particular set of circumstances. If doubts arise, the VAT Deductions & Financial Services Team should be consulted. Supply and liabilitySale of a debt The sale of a debt is Exempt from VAT under the VAT Act 1994, Schedule 9, Group 5, item 1. Note where the actual customers are purchased by a business also, there will be two distinct transactions namely the purchase of the assets and the purchase of the debt. Input tax incurred by a business chasing debts it has bought relates to a business activity. The input tax incurred by a business for use in making a supply in the course of business may be recoverable subject to the normal rules. For further information on business/non-business see V1-6 - Business/non-business. As the sale of debt is Exempt as mentioned above, the income from the sale will have an impact on an organisation's partial exemption recovery rate. Factoring / Invoice Discounting The term ‘factoring’ covers a variety of services involving debt assignment (often referred to as the purchase of debts), which the factor may provide to clients in respect of debts owing from their trade debtors. The advantages to the client may include some or all of the following: immediate finance (the up-front payment of, typically, 80% of the debt) protection against bad debts sales ledger administration a debt collection service, from initial contact with the debtors through to legal enforcement provision of credit information on customers provision of legal advice and provision of management information. Factoring Products A variety of terms are in use but the products the factor offers his client may include the following: Full Service (also known as non-recourse, old line, main line or traditional factoring): the factor is assigned the debt (which is disclosed to the debtor), opens a line of credit to the client, provides a full sales ledger service, sends debtors notices of assignments, undertakes recovery action and bears the loss if the debtor defaults in certain circumstances. Recourse factoring: as for the Full Service except that the factor does not bear the loss if the debtor defaults but has the right to assign the debt back to the client. Maturity factoring: the non-recourse service but without the provision of the line of credit for an immediate payment on account. Payment in full of the purchase price is made either upon receipt from the debtor or at the end of a fixed ‘maturity period’. This is usually based upon prior overall collection period of the entire ledger. Agency factoring (sometimes known as bulk factoring or agency discounting): the factoring arrangement is disclosed to the client’s debtors; the factor extends the line of credit but does not bear any loss. The client operates his own sales ledger and debt recovery system as the agent of the factor. Invoice discounting (also known as confidential factoring or undisclosed factoring): as for agency factoring but the factoring arrangement is not disclosed to the debtor. Can be with or without recourse. Undisclosed factoring: an invoice discounting arrangement with a limited debt protection facility - the factor agrees to bear a proportion of unrecoverable debts. You may also find further variants of the above. The Factoring Process The factor typically takes an equitable assignment of his client’s debts. This gives him certain legal rights without full legal ownership of the debt; it enables him to pursue the debt and, in the event of the client’s insolvency, gives him preferential rights over the income from the debt. Historically the factor did not take a legal assignment of the debt since this incurred stamp duty. This is likely to continue even though stamp duty has been abolished on the assignment of debts. Under his agreement with the client the factor may act on a recourse or non-recourse basis. In a recourse agreement he will, if the money cannot be recovered from the debtor, reassign the debt back to the client. In a non- recourse agreement the factor will bear the loss in the absence of any breach of the agreement between the factor and his client. The factor opens a client account ( sometimes called a ‘current account’) to which he credits the face value of the debts he has bought and debits his charges (these may be consideration for a number of standard rated supplies of administrative, clerical and accounting services). The balance, less an agreed retention, is available for the client to draw upon. The factor debits to the account any payments to the client and also a finance charge, sometimes described as a ‘discount’, ‘discount charge’ or ‘discounting charge’. Liability - EC law Article 135.1 (d) of the VAT directive specifically excludes debt collection and factoring from exemption: Transactions, including negotiation, concerning … but excluding debt collection and factoring Prior to this, Article 13B(d)(3) of the Sixth VAT Directive specifically excluded both debt collection and factoring from the exemption. When the Directive was recast into its current form however it was agreed that, as factoring was in any event a form of debt collection, it was not necessary to include the words ‘and factoring’ in the new version. Services of factoring and debt collection are therefore liable to VAT at the standard rate. The decision of the ECJ in the appeal of MKG-Kraftfahrzeuge-Factory GmbH (‘MKG’ - C-305/01 ([2003] STC 951) confirmed that the supply of factoring is essentially taxable. In GKFL Financial Services AG (“GKFL”- C-93/10) the ECJ held that an operator who purchases defaulted loan receivables at its own risk and at a price below their face value does not make a supply of services for a consideration for VAT purposes. The ECJ considered whether, as a purchaser of debts, GKFL was providing some form of debt collection service back to the bank that sold the debt (i.e. following the ECJ judgement in MKG – see above) for which the consideration would have being the deduction made from the face value of the debt in calculating the purchase price. The ECJ concluded that GKFL did not receive any consideration from the bank, as the difference between the purchase price of the debts and their face value was merely a reflection of the actual economic face value of the debts at the time of purchase. By contrast, in the case of MKG, the assignee of the debts did make a supply of services to the assignor because it received consideration for those services by way of a factoring commission and a del crede fee. Discount charges Where a factor provides credit in that the client can, as explained above, draw upon the account for which it is charged interest it will take the form of a ‘discount’, ‘discount charge’ or ‘discounting charge’. VAT Treatment is Exempt Administration or Service Charge (This may cover the provision of a full sales ledger management service, credit advice, debt collection service and the provision of management information). VAT Treatment is Standard Rated. . Guarantee of payment. VAT Treatment is Standard Rated. Assignment or re-assignment of debt. Outside The Scope of VAT Electronic transfer of funds (if charged for separately). VAT Treatment is Exempt For the VAT treatment of the ‘discount’ and other factoring related services please see paragraph 5.5 in VAT Notice 701/49 Finance Place of supply A UK factor may rely upon an overseas associate to collect a debt or may provide such services himself within the UK for an overseas factor. To determine the place of supply please see VATPOSS . Partial exemption, bad debt relief and cash accounting The factor will make both taxable and exempt supplies and will therefore be partly exempt. Where he provides significant administrative or accounting services to the client his standard rated supplies will allow him a high input tax recovery. Where, as in invoice discounting, the credit facility is the predominant feature of the agreement his input tax recovery will be lower. Factoring and bad debt relief A factor cannot claim bad debt relief for debts assigned to him by his client. The client cannot claim bad debt relief for a debt assigned to a factor but can do so if the factor re-assigns the debt to him (see VAT Notice 700/18: relief from VAT on bad debts ). Factoring and cash accounting Please see Notice 731 Cash Accounting for details on how to treat the debt for cash accounting purposes. Asset Based Lending Asset based lending is usually operated in conjunction with one of the factoring products (see VATFIN3220 ), except that the amount that the client can draw down can also take into account a percentage of the value of the client’s stock and inventory. Thus funds will be provided against invoices, stock, plant and machinery, land and buildings. Between 65% and 85% will be loaned, depending on the type of item. Lenders in an asset based lending situation have a charge over the above assets that can be invoked in the instance of default. The supply of credit is exempt under the VAT Act 1994, Schedule 9, Group 5, item 2. Sale of Debt and VAT

VAT on Business Expenses - Comprehensive guide on the HMRC rules around the application of VAT on business expenses such as hardware, software, rent, motor expenses etc and their recoverability. Introduction There are many expenses a business may incur in the course of purchasing goods or services and as such these will either be Standard Rated, Zero Rated, Exempt, Outside the Scope or Reverse Chargeable (where purchased from non UK suppliers) from a VAT liability perspective. The recovery of VAT incurred on expenses will depend on the nature of supplies (sales) the business is making. A business that makes only Standard Rated sales would be entitled to the full recovery of this input VAT from HMRC. A business that makes Standard Rated and Exempt supplies would only be able to partially recover VAT on its expenses under the Partial Exemption Rules (see VAT Explained topic) A business that makes only Exempt supplies of goods or services will in most cases not be able to recover any VAT incurred on expenses The list below outlines the VAT treatment of common business expenses and their VAT treatment: Rent and Service Charges Rent and Service charges incurred on a businesses principal place of business will normally be exempt but can be standard rated if the landlord has opted to tax or charge VAT. Note where a business is changed VAT on Rent and Service charges, it can normally recover this VAT from HMRC where it makes taxable or standard rated supplies itself. Professional Fees Professional fees for Accountancy, Legal, Architecture and Consultancy services are standard rated when purchased in the UK (including IOM) and Reverse Chargeable when purchased from outside the UK. ( Please see Reverse Charges button for more details on accounting for reverse charges) . VAT Recoverable from HMRC. Hardware and other Peripherals Hardware such as computers, monitors, keyboards, scanners and printers are all taxable at the standard rate when purchased in the UK (including IOM). If these items are purchased from outside the UK then UK import VAT at 20% will be payable. VAT Recoverable from HMRC. Software The purchase of software in the UK (inc IOM) will attract VAT at the Standard Rate 20% and will be Reverse Chargeable if purchased from a non UK supplier. VAT Recoverable from HMRC. Fuel Fuel including petrol and diesel is Standard Rated and can be recovered from HMRC where: The fuel is used for business use The appropriate fuel scale charge is used where the fuel is used for private use Restaurant Food and Catering Breakfast, Lunch and Dinner, Drinks while eating in a restaurant will attract 20% Standard Rated VAT. Hot Takeaway food will also be Standard Rated. VAT Recoverable from HMRC. Note - Cold takeaway food is Zero Rated so no VAT is charged. Tools and Equipment The purchase of tools and equipment for use by trades men and women in the UK (incl IOM) will be Standard Rated. VAT Recoverable from HMRC. Materials in Building Trade Most items that are considered building materials and sold by builders merchants are charged at the Standard Rate. VAT Recoverable from HMRC. Children's Clothing & Footwear The sale of children's clothing and footwear is Zero Rated. Note there are conditions that govern the ability to Zero Rate and can be read in detail here. Young children's clothing and footwear (VAT Notice 714) Electricity and Gas VAT is charged by utility companies for Gas and Electricity at the Standard Rate 20% unless their use of Gas and Electricity is below the de minimis usage limit in which case VAT would be charged at the reduced rate of 5%. VAT Recoverable from HMRC. Business Rates Business Rates are outside the scope of VAT Business Entertaining Most forms of business entertainment such as taking customers to restaurants for meals and drinks or to pubs or bars, golf days, football matches etc will incur VAT at the Standard Rate. However the VAT on such entertainment for UK customers is not recoverable from HMRC (blocked from recovery). VAT on overseas entertainment is recoverable where the entertainment is for purely business purposes and the individuals being entertained do not receive any private benefit as a result. Note there is a fine line between purely business entertainment and private entertaining so in practice many businesses may block business entertainment regardless of whether it takes place in the UK or abroad. Staff Entertaining Where an employer provides entertainment for the benefit of employees for example to reward them for good work or to maintain and improve staff morale, it does so wholly for business purposes. Thus the VAT incurred on entertainment for employees for example staff parties, team building exercises, staff outings and similar events is input tax and is not blocked from recovery from HMRC under the business entertainment rules. However, there are two exceptions to the general rule. These are where: Entertainment is provided to directors, partners or sole proprietors of the business Employees act as hosts to non-employees Staff Subsistence VAT incurred by employees for subsistence while carrying out their work duties away from the normal place of work is recoverable where the actual cost of the subsistence such as meals is reimbursed or paid by the employer. VAT Recoverable from HMRC. Hotel Accommodation Hotel accommodation costs incurred in the UK (incl IOM) will normally include VAT and where this is paid by a business for its employees while working away on business, it can be recovered from HMRC. VAT Recoverable from HMRC. Hotel Accommodation costs incurred abroad are likely in many instances to include overseas VAT as the place of supply of Hotel Accommodation is where the hotel is located. (See Land & buildings) Note : As the place of supply for Hotel Accommodation is where the Hotel is located, the cost would not be subject to the Reverse Charge procedure in the UK Mobile Phone costs The purchase and connection of mobile phones for business use will include VAT at the standard rate 20%. This VAT can be recovered where the phones are used for business purposes. VAT Recoverable from HMRC. Phones provided by businesses to their employees where the business covers the cost of calls for business use (and any small amounts incurred for private use) can treat the input VAT as its own and recover the VAT. VAT Recoverable from HMRC. If the business charges employees for calls made on mobile phones it has provided, it must also charge output VAT on the amounts charged to their employees. If Employee are allowed to make private calls on mobile phones provided by a business, then the business should analyse calls between business and private use to ensure a fair and reasonable recovery of VAT is made. Telephone Land Line and or Broadband Services Telephone land line and broadband setup costs and monthly charges will include VAT at 20% Standard Rate. VAT Recoverable from HMRC. Delivery Charges Delivery charges which are contractually included in the supply of delivered goods follow the same VAT liability of the goods themselves. If the goods being delivered are Zero Rated then any separate charge for delivery will be Zero Rated. Where there is a separate contract or arrangement for delivery, then a separate supply of delivery will occur and this charge will be standard rated. VAT Recoverable from HMRC. Motor Vehicle expenses Motor Expenses incurred on company cars such as repairs and servicing, parts, parking etc will incur VAT at the Standard Rate. VAT Recoverable from HMRC. If you use a vehicle for business purposes, you can reclaim the VAT you were charged on repairs and maintenance as input tax as long as the business paid for the work. It does not matter if the vehicle is used for private motoring or if you have chosen not to reclaim VAT on road fuel. Note: - If you’re a sole proprietor or partner and use a vehicle solely for your own private motoring you cannot reclaim the VAT from HMRC on repairs as input tax. Charging Electric Vehicles Expense Businesses Charging Electric Vehicles - VAT incurred by businesses when charging electric vehicles can be recovered on the business use of those vehicles, where the vehicles are charged at work or at public charging premises. You can also recover the VAT for charging your electric vehicle if you’re a sole proprietor or a partner in a partnership business, and you charge your electric vehicle for business purposes at home. You should work out how much of the cost of charging your electric vehicle is for business use and how much is for private use by keeping mileage records. The normal input tax rules then apply. Employees Charging Electric Vehicles - If an employee charges an electric vehicle (whether this is a company vehicle or not) at a public charging point , the supply of electricity is made to the company or employer. They can recover the VAT on the cost of charging the electric vehicle. The employer must keep detailed mileage records to work out how much of the charging cost is used for business and private purposes where applicable. Where an employee charges an electric vehicle (whether this is a company vehicle or not) at home, the overall supply of electricity is made to the employee and not the employer. The employer is not entitled to recover the VAT on the cost of charging the electric vehicle. Advertising Advertising costs will have 20% VAT applied if purchased in the UK and will be reverse chargeable if purchased from outside the UK. VAT Recoverable from HMRC. Sponsorship Sponsorship is a payment to a charity, social project or a business for which the sponsor receives something in return. Payment may be in the form of money, goods and services (commonly referred to as ‘barter’), or a combination of money with goods and services. Sponsorship is outside the scope of VAT where it is provided as a form of charity. Where sponsorship involves one party being obliged to provide funds etc to another party in return for benefits such as advertising, logo promotion, entertaining, brand promotion etc, then the Supply in Standard Rated. VAT Recoverable from HMRC. Business Expenses Incurred Prior to VAT Registration Input VAT on goods and services incurred by a business prior to being registered for VAT can be treated as recoverable input VAT where it is attributable to taxable supplies made by that business. The conditions for recovering VAT on goods prior to VAT registration are as follows: The goods were supplied not more than 4 years before the business was registered or was required to be registered The goods were supplied to the person who is now registered for VAT The goods were obtained for the business which is now covered by the VAT registration and related to its taxable activities — if the services related partly to taxable activities and partly to other activities, you must work out what proportion of the use of the services related to the taxable activities You still hold the goods or they have been used to make other goods which you still hold You compile a stock account of the goods — this must show the quantities of goods and the dates when you obtained them, and if you used any goods to make other goods, or disposed of them after you were registered for VAT, the account must give details, with dates Note: Remember, you cannot claim VAT incurred on goods which have been completely used up before registration. You can treat the VAT on services that you received before you were registered as if it were input tax. If: The services were supplied not more than 6 months before the business was registered or was required to be registered The services were supplied to the person who is now registered for VAT The services were received for the purposes of the business which is now covered by the VAT registration and related to its taxable activities — if the services related partly to taxable activities and partly to other activities, you must work out what proportion of the use of the services related to the taxable activities The services were not related to goods which you disposed of before you were registered (such as repairs to a machine which was sold before registration) You compile an account of these services, this must describe the services and the dates when you received them and, if the services related to goods which you disposed of after you were registered for VAT, the account must give details, with dates -Contains public sector information licensed under the Open Government Licence v3.0. Business Expenses and VAT - VAT on Business Expenses Guide

Comprehensive guide on HMRC rules on when welfare and care services can be treated as exempt from VAT and what bodies qualify for the VAT exemption. Also including when is VAT applicable. Key VAT Terminology "Take the heavy lifting out of your role search!" Welfare and Care Services VAT - How VAT is applied in the Welfare and Care Sector What are Welfare Services Welfare services are services which are directly connected with the: Provision of care, treatment or instruction designed to promote the physical or mental welfare of elderly, sick, distressed or disabled persons Care or protection of children and young persons Provision of spiritual welfare by a religious institution as part of a course of instruction or a retreat, it must not be designed primarily to provide recreation or a holiday The law Governing Welfare Services Schedule 9, Group 7 VATA 1994 provides that supplies of welfare services and connected goods by charities, state regulated private welfare institutions or agencies, or public bodies are exempt from VAT. This Group also provides that the supply, otherwise than for profit, of certain goods and services made by a religious community to its resident members are also exempt from VAT. Exemption from VAT means that although no VAT is charged on the supply being made, the person making the supply is generally not entitled to reclaim VAT on the costs incurred in making the supply. Schedule 7A, Group 9 VATA provides that supplies of welfare advice and information by a charity, state regulated private welfare institution or agency are made at a reduced rate of VAT. Services that are directly connected with the provision of care, treatment or instruction Care, treatment or instruction Care, treatment or instruction includes the protection, control or guidance of an individual when this is provided to meet their medical, physical, personal or domestic needs. Any instruction must relate to the care or treatment of the individual for example showing them how to dress or bath themselves. It does not include the supply of information in the form of advice or help to enable them make an informed decision. For a service to be exempt under this heading the following must be satisfied: The recipient must be an elderly, sick, distressed or disabled person The care, treatment or instruction must be part of an specific individual care plan and the service must relate to it An assessment of the recipient’s health condition and medical needs has been carried out by an appropriately trained person Examples include: Personal or nursing care (including assistance with bathing, dressing, toileting and other personal hygiene) General assistance and support with everyday tasks such as form filling, letter reading or writing, bill paying Certain routine domestic tasks Counselling Looking after or supervising vulnerable people Support or instruction designed to develop or sustain a person’s capacity to live independently in the community Protection, control, guidance or companionship that is required to meet an individual’s personal or domestic needs Residential care, including accommodation, board and other services provided to residents as part of a care package When routine domestic tasks are exempt from VAT Routine domestic tasks (such as housework, simple odd jobs, shopping and collecting a prescription or pension) that are performed by one of the following bodies detailed c harities, public bodies, state regulated private welfare institutions or agencies. The conditions are: The recipient of the service is an elderly, sick, distressed or disabled person An assessment of the recipient’s health condition, medical needs and ability to perform each task has been carried out by an appropriately trained person, such as a medical or health professional or any person with relevant training or experience in social work or social care This assessment has shown that the recipient is unable to carry out the tasks safely or adequately, and that this inability presents a risk to their health or welfare A record of each assessment is kept by the supplier of the service The service provided is a routine domestic task that the majority of the population would expect to carry out for themselves and which is required to keep a household going, this excludes specialist services such as non essential gardening, decorating and other house maintenance including re-roofing, plumbing and electrical services When a person is unable to carry out tasks safely or adequately A person is considered to be unable to carry out a routine domestic task safely when their performance of the task involves a likelihood of physical harm or injury. For example, a person who has a poor sense of balance may be unable to dust high up areas safely if this dusting would involve standing on a chair or ladder. A person may be unable to carry out a task adequately when they are unable to perform tasks properly or effectively. For example, an elderly or disabled person who has mobility problems may be unable to shop regularly enough to meet their nutritional needs. What’s meant by ‘significant’ pain or discomfort The word ‘significant’ is used to exclude the low levels of pain or discomfort experienced by many people in carrying out routine domestic tasks. Assessments of a service recipient’s needs should distinguish between low levels of pain or discomfort, and a significant level of pain or discomfort that restricts ability to carry out routine tasks. Examples of when tasks cannot be carried out without significant pain or discomfort include a person suffering from a debilitating condition who finds carrying out routine domestic tasks physically exhausting, and so suffers significant discomfort. Care or Protection of Children and Young Persons Services relating to care and protection of children that are exempt Exemption applies to services supplied by one of the following providers charities, public bodies and state regulated private welfare institutions or agencies The circumstances are: Care provided in a children’s home Day care services such as those provided by a nursery, playgroup or after school club (but not activity based clubs such as dance classes) The placement of a child with foster carers by a fostering agency The assessment of families to be included on the at risk register by providers mentioned above The care, support and protection of looked after children The training and assessment of prospective adopters by an adoption agency The special rules that apply to non residential care for children After school clubs and other providers of non residential care for children are only required to register under the appropriate social legislation if they provide a designated number of hours of care to children under the age of 8 years old. If you are a qualifying institution as detailed above. You may, if you wish, choose to regard the care you provide to children over 8 years old as VAT exempt, in addition to the care you provide to younger children if you: Provide care on a commercial basis to children who are younger than 8 years old, as well as to older children Operate identical hours of opening for all age groups Provide activities for children over 8 years old that are comparable with those provided for younger children Services related to the care or protection of children that are not exempt supplies of welfare Some welfare providers, such as independent fostering agencies, receive fees for services that, although concerned with the overall welfare of one or more child, are not primarily and directly connected with the care or protection of a specific child. In other instances a business or club may provide services which it feels are supplies of welfare when in fact they are not. Examples include fees received for: Training of carers, or potential carers, where this is not linked to the needs of a specific child Assessment of a potential foster carer’s suitability to look after children, where this is not linked to the needs of a specific child Play centres and activity based clubs that provide services such as football and dancing lessons, indoor soft play areas and children’s entertainment Consultancy or research services Education of children These services are not usually exempt unless they are provided as part of an exempt composite supply of care and protection. But, education and training services provided by certain ‘eligible bodies’ are exempt from VAT under separate provisions. You can find out more about the exemption for education and training in Education and vocational training (VAT Notice 701/30) . Spiritual welfare Supplies of spiritual welfare that are exempt from VAT A supply of spiritual welfare is exempt if it is made by a: Charitable religious institution and forms part of a course of instruction or retreat that is not designed primarily to provide recreation or a holiday and is predominately concerned with the spiritual growth and awareness of the recipient Religious community (for example a nunnery or monastery) and consists of goods and services incidental to the provision of spiritual welfare, is made otherwise than for profit and is made to a member of that community in return for a subscription or any other payment made as a condition of membership Spiritual welfare and retreats The provision of spiritual welfare as part of a retreat is exempt when provided by a religious institution. Supplies may include: Spiritual counselling of an individual Guided exploration of spiritual needs and development Discussion, meditation, prayer or worship sessions Supplies that are not exempt from VAT include: Any supply made by a body other than a religious institution or community Any supply that is not made as part of an organised retreat or course of instruction provided by a religious institution Conferences or retreats when the predominant purpose is not spiritual welfare Educational courses in theology, or similar subjects, where the predominant purpose is to expand knowledge of spiritual matters rather than to Provide spiritual welfare services Meetings to discuss theology or aspects of Church doctrine Bodies that provide exempt welfare services Supplies of welfare services, and certain goods supplied in connection with those services, are only exempt when made by the following specified providers: Charities, see paragraph Public bodies, see paragraph State regulated private welfare institutions or agencies Evidence of charitable status In order to apply the welfare exemption a charity must hold evidence that it is registered with the Charity Commission for England and Wales, or if not registered with them (for example, if it is exempt from registration with the Charity Commission or is a Scottish or Northern Ireland charity) then it must have evidence that it has been formally recognised as a charity by HMRC for tax purposes. How to Get recognition from HMRC for your charity . Welfare services provided by charities Welfare services provided by charities are not always a business. The provision of welfare services and related goods, supplied consistently below cost by charities to distressed people for the relief of their distress, is not a business activity for VAT purposes. You can find further details on this in How VAT affects charities (VAT Notice 701/1) . Public Bodies The following are public bodies: Government departments Local authorities Bodies that perform functions similar to those carried out by government departments or local authorities, and act under any enactment or instrument for public purposes rather than for their own profit You can find out more about who are public bodies in Local authorities and similar bodies (VAT Notice 749) . State Regulated Private Welfare Institutions and Agencies State regulated private welfare institutions and agencies are establishments or other providers that are registered with, or regulated by, one of the following regulatory bodies: Care Quality Commission Scottish Commission for the Regulation of Care (The Care Commission) Care and Social Services Inspectorate Wales Northern Ireland Regulation and Quality Improvement Authority Office for Standards in Education (OFSTED) Any other similar regulatory body State regulated private welfare agencies include domiciliary care agencies, independent fostering agencies, voluntary adoption agencies and nurses’ agencies. When a Business Becomes State Regulated A welfare provider becomes state regulated when the relevant regulatory body approves its application to register. The provider is not state regulated whilst its application is under consideration and so it may not exempt its supplies of welfare services during that period. Goods Provided in Connection with Welfare Services Goods you provided as part of, or in connection with your exempt supply of welfare services are usually also exempt. Examples include: Meals and refreshments you provide to the beneficiaries in the course of your provision of care or spiritual welfare services for which no additional charge is made Bandages, plasters or ointments you supply in the course of a supply of care and treatment in the recipient’s home Items provided to children by playgroups or nurseries, such as picture books, crayons and toys, when these are provided by the playgroup in connection with the care But, any goods that can be separated from an exempt welfare service, or are not provided in connection with such a service, are not exempt. Services Supplied by Welfare Providers that are Exempt from VAT Not all services supplied by welfare providers are exempt from VAT. Exemption applies only to the welfare services detailed above. For state regulated private welfare institutions, such as residential care homes, only those activities that are regulated by the appropriate regulatory body, are exempt. But, this will include all care and treatment services provided within a regulated residential care home. Welfare Providers and VAT Registration You are required to register for VAT when the value of your taxable supplies exceeds the VAT registration threshold . If you provide welfare services it is likely that the majority of your supplies will be exempt, and you may not be required to register for VAT. A welfare provider which also makes taxable supplies, but whose taxable activity is below the registration threshold, can apply to register for VAT on a voluntary basis. You can find more advice on registration from Notice 700/1: should I be registered for VAT? . VAT and supplies received by welfare providers In general, a welfare provider will incur VAT on its purchases, such as the supplies of staff, in the same way as any other organisation. But, if you are a charity you may not have to pay VAT, or may be entitled to a reduced rate VAT, on certain goods and services that you purchase. Read about the VAT relief for charities in How VAT affects charities (VAT Notice 701/1) . Supplies of Staff Employment businesses in the welfare sector make a taxable supply of staff to third parties, such as local authorities, if the third party is legally responsible for the onward supply of providing care to the final recipient. But, when state regulated welfare providers provide welfare services to the final consumer, these services remain exempt even if they are contracted and paid for by a local authority or other third party. For example, a local authority may contract out the provision of domiciliary care services for the elderly or disabled to a state regulated domiciliary care agency. Although the local authority rather than the final consumer may pay the domiciliary care agency charities for the care services, for VAT purposes the care agency has still made an exempt supply of welfare services rather than staff to the local authority. This is because the care agency’s staff will still be working directly to the agency itself throughout the provision of the services rather than to the local authority. Exemption would also apply to cases where a local authority or other body subcontracts the provision of adult placement schemes. Under these schemes a ‘worker’ provides personal care or support services to adults living with them or living in their own homes. Currently scheme providers need to be registered with the Care Quality Commission. Sometimes local authorities make payments directly to people who have been assessed as needing help from social services, and who would like to arrange and pay for their own care and support services instead of receiving them directly from the local council. These arrangements are called direct payment schemes, and any welfare services provided to the recipient by a charity or state regulated private institution or agency are exempt from VAT. But, supplies to recipients of direct payments that are not made by a charity or state regulated private welfare institution or agency are subject to VAT at the standard rate. Agency or Arrangement Fees If you are an agent, your commission, fee or any other charge that you made for arranging and administering the supply is standard-rated. How to Decide Whether you’re an Agent or a Principal This is determined by reference to your contractual and other arrangements. VAT guide (VAT Notice 700) contains further details that may help you decide whether you are an agent or principal. Reduced-Rated Supplies of Welfare Advice or Information Welfare Advice or Information Welfare advice or information is advice or information that directly relates to the physical or mental welfare of elderly, sick, distressed or disabled people, or the care or protection of children and young people but does not relate to a particular individual but to the above groups of people. It is often provided through videos, DVDs or other media, and the reduced rate of VAT will apply when welfare advice or information is provided by the bodies described above. The provision of this advice or information will not fall within the reduced rate if it relates to the specific needs of a particular individual. These Are Some Examples of Welfare Advice or Information: (a) Advice or information that directly relates to the physical or mental welfare of elderly, sick, distressed, or disabled people includes: Advice on caring for people with Alzheimer’s disease Home safety advice for elderly Dealing with domestic violence This list is not exhaustive. (b) Advice or information that directly relates to the care and protection of children and young people includes: Contraception and sexual health for young people Advice or caring for children with special needs or disabilities Stranger awareness for children and young people Strategies for dealing with bullying This list is not exhaustive. Who can apply the reduced rate to supplies of welfare advice Only supplies of welfare advice or information made for a charge by the following bodies qualify for the reduced rate of VAT: Charities State regulated private welfare institutions or agencies Supplies of welfare advice or information made by a trading subsidiary of a charitable body are not covered by the reduced rate. Ways the welfare advice or information can be given It can be given in any form. Examples include: DVD or video Audio cassette CD Rom In person This list is not exhaustive. If you supply welfare advice or information in the form of a book, leaflet, pamphlet or similar item then your supply will be zero-rated if it meets the conditions set out in Zero rating books and printed matter (VAT Notice 701/10) . What the reduced rate applies to The reduced rate applies to supplies of goods made wholly or almost wholly for the purpose of giving welfare advice or information (that means at least 90% of the purpose of any goods used must be for conveying welfare advice or information). Examples include a video advising the elderly on safety in the home, or a DVD featuring advice for children on dealing with bullying. The inclusion on such goods of incidental information, for example, an appeal for donations or information on the charity’s objects, will not affect the reduced rate. Goods that have an independent use and also carry incidental welfare advice, such as a mug or T-shirt bearing a slogan, are not covered by the reduced rate. If the welfare advice or information is supplied free of charge If you provide advice free of charge this is a non business activity for VAT purposes. If you are VAT registered you will not be able to recover any of the VAT you incur on costs that relate to your non business activities. Costs incurred in providing the welfare advice or information The reduced rate applies only to the charge made by charities and state regulated private welfare institutions and agencies when they supply welfare advice. Some of the costs they incur in making their supplies of welfare advice will be taxable, for example the costs of recording advice onto an audio cassette. If the charity or state regulated private welfare institution or agency making the supply of welfare advice is VAT registered it will be able to recover this VAT subject to the normal input tax rules. If welfare advice is provided as part of a course, class or lesson The charity or state regulated private welfare institution may be making a supply of education. Education includes lectures, conferences and distance teaching. Please see Education and vocational training (VAT Notice 701/30) for more information. If the welfare advice or information is given as part of a vocational training course If you provide welfare advice to prepare attendees for future employment or add to their knowledge in order to improve their performance in their current job you may be providing vocational training. Please see Education and vocational training (VAT Notice 701/30) for more information. But, if you merely supply welfare advice in the form of goods, such as a video or DVD, then the supply will not be training. - Contains public sector information licensed under the Open Government Licence v3.0.

Comprehensive guide on automating the end to end VAT compliance and reporting processes including the planning, scoping and risk and control analysis requirements. Introduction The introduction of the Making Tax Digital (MTD) requirements in the UK mandated many organisations to automate or semi automate their VAT compliance processes. The benefits of automation can be significant if it is carried out robustly with strong controls built into the process. Also with e-invoicing on the horizon in the UK and more rapid developments in this field in Europe, South America and Asia, VAT automation has become almost impossible to avoid or delay. Benefits of Automation Elimination of Spreadsheets that usually cause errors Elimination of the manual VAT return Automated VAT liability determination Immediate VAT Analytics Elimination of bottlenecks in the VAT return completion cycle Elimination or reduction in human intervention thus reducing errors Prompts an organisation to undertake a complete integrity review of systems and VAT coding etc to ensure accuracy is built into MTD Reduction in VAT Risk if undertaking thoroughly Automation of the Partial Exemption and VAT recovery process and significantly reducing the time and effort usually embedded in the VAT return process Opportunity to map out and document system and workflow data lineage Reduction in Error Correction Notices submitted to HMRC Enables the possible outsourcing of the VAT Compliance function and resources to be focused on specialist VAT advisory Closer integration with Finance Improved transparency and relationship with HMRC Improved management reporting by instant understanding of areas of the business that are consuming VAT Improved P&L VAT forecasting and Reporting Facilitates quicker impact assessments for new products and changes in legislation Integration of static data such as VAT Rates, Client country of Operation /residence, exchange rates, VAT Group, Non VAT Group company markers, Enables the development and build of a central Tax Data Hub which ingests, churns, organises and transforms data from various systems and sources in to a VAT Return Use of built in exception reports to detect and correct errors real time before the submission of the VAT Return Disadvantages of Autom ation Can actually create more bottlenecks and slow the VAT reporting process down if automation is not end to end and lacks inbuilt controls Can lead to lack of transparency over processes that were more visible using manual processes Can impact VAT P&L reporting if analytical reports and tools are not built into the automated process Due to lack of detailed information that would normally appear on spreadsheets there can be an over reliance on automation and assume the data is always correct. How to Go About Automating the VAT Compliance Process Larger more Complex Entities The amount of effort and work that will be required to automate the compliance and reporting process will directly depend on: The existing level of automation The number of different systems in use for VAT reporting The size and complexity of the organisation The complexity of the Partial Exemption Method The number of manual processes and adjustments required for VAT reporting The method of automating the process internal IT department or External consultants Number of externally supplied systems used The existing skill set of IT, VAT and Finance staff within the organisation Step One - Planning and Budgeting The first action point for any compliance automation will be to draw up a project plan detailing: The design of the automated process - what is it expected to look like and how it will work in practice Key project timelines and expected delivery dates for each stage of completion Key personnel and what parts of the project they are responsible for List of controls that are required to ensure the integrity of the data and to protect any sensitive customer data Any external software or systems being used and details of when and how they will be engaged in the automation process Any pinch points such as any project overlap with key BAU reporting time frames Budgets for the cost of implementation at each stage Key business area / management sign-offs required at each stage Software that will be used to automate the process and any licencing required The future cost savings and efficiencies to be derived from automation Testing process and expected dates List of systems, data sources, software, that will need to be reviewed (see next step) List of static data / sources in use that will need to be incorporated Step Two - Draw up a list of Processes and Systems The second stage of automating the VAT compliance process will be to carry out an inventory of the systems and processes used in the VAT compliance and reporting process. Typically this will include: Ac counts receivable systems used to invoice / bill clients and record sales and Accounts payable systems used to process invoices, record costs and VAT Systems used for e invoicing or in conjunction with Systems used purely to record transactions that then feed accounts receivable and payable systems System to system interfaces Cost allocation systems that are used to carry out complex cost allocations in large organisations Exception reporting systems that feel from any of the above systems Any other manual systems or processes used in the VAT reporting and compliance process From the full list of systems, it will then be necessary to categorize the systems into in-scope and outside scope of automation. Often you can have front end bespoke systems that feed into larger main systems and as such including them all would mean duplicating the data. Therefore in such situations, it is necessary to extract the data for automation from the main system and thus reduce the number of data sources. For example there could be 4 bespoke billing systems that all interface into SAP and as such it maybe possible to extract all the required data for automation from SAP instead of from all the individual systems. So as part of the scoping exercise, 4 systems could be categorized as outside the scope for automation with only SAP being in scope for extracting data for the automation process. Step Three - Carry out and Integrity Review of the Systems for VAT Reporting At this point in the process, it can be a good opportunity to conduct a review of the VAT reporting (including legacy VAT Reports) and controls in each system to ensure that VAT is being booked and reported accurately. This will usually only be necessary if there has not been a regular or recent review. This is a crucial step as the automated process will need to be tested and signed off for accuracy. In larger organisations, the Internal Audit department may want to review the end to end automated process and as such having done a full integrity review may provide them with comfort. Step Four - Identify the Key Mandatory Fields Required from Each System The ultimate objective of any VAT reporting system is to ensure that accurate VAT returns are generated and ready for filing to HMRC. Therefore it is imperative that the key fields available in each system are incorporated into the automation process to ensure this objective is met. Examples of these are: Invoice Amount Gross, Net and VAT Invoice / transaction date Details of the transaction VAT code applied to the transaction Customer type (business / consumer) Customer country of operation / residence Product type VAT classification code SR, ZR, Exempt Customer Id Transaction Id Step Five - Identify all the Manual Adjustments that are Carried Out It is often the case that there are many manual calculations and adjustments that are carried out as part of the VAT reporting process and these need to be identified so as to eliminate and build into the automated reporting process. Making Tax Digital requires digital linking so eliminating manual processes will help to ensure compliance. Step Six - Identify any Static Data that is Consumed as Part of the VAT Reporting Process Often in manual VAT reporting Processes where spreadsheets are used there will typically be static data such as FX rates, VAT rates, customer location data, VAT recovery percentages, VAT allocation percentages, profit / cost centres etc that form part of the VAT calculations. Step Seven - Build a Central VAT Data Warehouse or Hub Once all of the systems, data sources and manual processes and static data have been identified and categorised into in-scope / out of scope, then it will be necessary to build a VAT Data Warehouse or Hub to Extract and Ingest, Store and Transform the data into a VAT return ready for filing to HMRC. This element of the project will be the job of either internal or external IT specialists who can build the necessary code to ingest and transform all of the data into an accurate electronic VAT Return. Additionally static data tables can be built into the VAT Data Warehouse via links. For Example links to HMRC exchange rates or links to client on-boarding static data systems. Data Analytics tools such as Alteryx, Tableau, Power BI, SAP Agile or RPA "Robotic Process Automation" software can assist in transforming data and also adding robotics to replicate tasks normally carried out by humans but without the risk of manual errors. Also where the organisations Partial Exemption Method is complex, it may be necessary to build an automated VAT Sector allocation and VAT recovery calculation engine within the VAT Data Warehouse or bolt on a bespoke system build by an external vendor to allocate and calculate input VAT recovery for different areas of the business. (Anaplan for Example) Note: Testing of the systems should be conducted once built to ensure it meets the objectives set. Step Eight - Linking System Data, Static Data to the VAT Data Warehouse Once all of the system reports, data sources, and static data requirements have been identified, it will be necessary for Tax, Finance, IT and external system vendors, external IT consultants to work collaboratively to link the data to the VAT Data Warehouse in the correct format ready for transforming and calculating the final VAT return. This will normally be done using Application Programming Interface (API's). Note: Testing of the links should be conducted once built to ensure they transfer the data as required. Step Nine - Filing the Automated Electronic VAT Return to HMRC The electronic filing of the VAT Return to HMRC will be the next process to automate. This can either be carried out using bridging software provided by a software provider where figures from the VAT return are linked to the software providers E filer and then onward transmitted to HMRC or the whole filing process can be managed by an external company where they can build a link to the organisations VAT Data Warehouse and the whole VAT reporting, sign-off, partial exemption VAT calculation, MI reporting and filing to HMRC will be managed by the organisation using the software provided. Note: Again testing should be carried out to ensure the VAT Returns file correctly. Step Ten - Post VAT Return Management Information The final leg of the automation (if not already built) would be to build a VAT reporting MI function that enables key reports to be generated from the data. These reports would be used in reporting key metrics to management such as: Total Output VAT per Function / Sector Total Input VAT per Function / Sector Total VAT by Cost Type (which areas are consuming VAT) Total VAT recovery by Function / Sector (E.g. Banking, Equities, Fixed Income, Credit) or ( Hotels, Bars, Restaurants, Cafes, Convenience stores) VAT recovery by Subsidiary, Branch Irrecoverable VAT by Sector, entity, region Reverse Charge VAT by sector / entity Variance analysis and charts comparing month on month, quarter on quarter, year on year VAT recovery rates aligned to each sectors VAT pool VAT allocation drivers Fully recoverable VAT by sector / function / entity Other The greater the detail and clarity of the reports, the more beneficial they will be for management reporting. Automation for Smaller Entities The digitalisation and automation of smaller entities is less likely to involve the internal build of bespoke systems and more likely to involve smaller firms buying and using off the shelf Accounting and Taxation Software which can be purely cloud based. These packages will have all the necessary accounting, VAT, Tax and reporting functionalities built in to enable businesses to become automated and digitalised relatively quickly without any major need for internal software or systems development. Mainstream software providers such as Sage, Zero, IRIS, Quickbooks just to name a few can be purchased and used by either business owners or their Accountants for accounting, VAT and general Tax reporting. That said, the automation of VAT Compliance and Reporting for smaller entities can be completely bespoke and built by IT specialists to the specifications and requirements of the business. Many of the steps (above) that may be used by larger entities can be used for smaller entities. VAT Automation - VAT Compliance Automation

Place of Supply Rules Introduction The place of supply rules are an important aspect of VAT as they determine if a supply takes place within or outside the UK and as such whether VAT applies to a supply or not. Place of supply of Goods Goods supplied to customers in the UK and remain in the UK are subject to UK VAT. This includes goods purchased from a supplier who assembles them and they are not removed from the UK. Goods supplied to overseas customers where the goods are removed or assembled outside the UK are outside the scope of UK VAT Place of supply of Services The place of supply of services primarily depends on what service is being supplied and whether the supply is to a Business Customer (B2B) or a Private Individual (B2C) . General Rules The general rules as per the VAT Act 1994 for (B2B) and (B2C) are as follows: The place of supply for Business to Business supplies (B2B) is where the customer belongs The place of supply for Business to Customer (private individuals, charities or government organisations) supplies (B2C) is where the supplier belongs unless the services are specified supplies such as accountancy, financial and insurance, consultants, lawyers, engineers, supply of staff, banking, provision of information, data processing etc. Specific Business to Consumer (B2C)services such as transfers and assignments of copyright, patents, licences, trademarks and similar rights, acceptance of any obligation to refrain from pursuing or exercising a business activity, advertising services, services of consultants, engineers, consultancy bureaux, lawyers, accountants, and other similar services — data processing and provision of information, other than any services relating to land, banking, financial and insurance services, the provision of access to, or transmission or distribution through, natural gas and electricity systems and heat or cooling networks and the provision of other directly linked services, supply of staff, letting on hire of goods other than means of transport, emissions allowances are also supplied where the customer belongs. Such services supplied to non UK customers are outside the scope of VAT and are thus Zero Rated. Services Supplied in UK to UK Customer Taxable services supplied by UK VAT registered businesses to UK business customers (B2B) are subject to VAT at the standard rate of 20% or the reduced rate of 5% depending on the nature of the service being supplied. Taxable services supplied by UK VAT registered businesses to UK resident private individuals (B2C) are subject to VAT at the standard rate of 20% or the reduced rate of 5% depending on the nature of the service being supplied. For example - if a UK VAT registered business supplies legal services to a private individual in the UK then 20 % VAT would be applicable. Services Supplied to a Non - UK Customers Services normally taxable in the UK and supplied by a UK VAT registered business to non UK business customers (B2B) are outside the scope of UK VAT and normally treated as Zero Rated Taxable services supplied by UK VAT Registered Businesses to a Non UK resident private individual (B2C) are outside the scope of UK VAT and normally treated as Zero Rated B2B - Supplies to Non UK Customers - Evidence Required Where UK businesses are providing services to non UK business customers, they must satisfy themselves that the customer is actually in business. This is normally evidenced primarily by the following: The customer providing a VAT registration number and then verifying via the Vies system if in the customer is in the EU or other local government VAT number checkers. The company having a registration number with their local registrar of companies. Corporation or other local business tax number Note: If a UK business cannot verify that the customer they are supplying is in business, then HMRC requires them to charge 20% VAT on their supply similar to if they were supplying a non UK resident private individual. Basically Treat the supply as a B2C supply. For example if a UK company is supplying accountancy services to a company in Germany but it has received no information such as a VAT registration number or company number or any other evidence to verify that it is actually in business, then the UK company should charge 20% VAT on the supply. B2B - Supplies to Non UK Customers that Make both Business and Non Business Supplies Where a UK business makes supplies to non UK organisations that have both business and non business activities such as charities or Government organisations, then the supply should be treated as B2B and treated as outside the scope of UK VAT / Zero Rated. If on the other hand the charity or Government organisation was only carrying out non business activities, then the supply should be treated as B2C and VAT applied at 20% accordingly. Establishment and the place of Supply The Establishment most closely linked with a supply will usually determine whether or where VAT is applicable. Where an establishment is actually providing the services, this should normally be reflected in the contract. However, where the contract conflicts with the substance and reality of the situation, the supplier should normally be treated as belonging at the establishment from which the services are actually provided. For example if company (A) in Germany contracts with customer (B) in Germany to supply consultancy services to its London Branch (C) and the actual consultancy services are provided by (A's) London registered company then the place of supply will be seen as the UK and as such 20% reverse charge VAT would be applicable as the contract for services is in substance between Company (A) and the London Branch of (B) company (C) Key Indicators for Determining the Establishment Most Closely Linked with a Supply Where are the necessary human and technical resources (for example database, technical equipment, office equipment, telephones, and so on) for actually providing the services permanently based Which establishment appears on the relevant contracts, correspondence and invoices Does reference to the preferred establishment lead to a more appropriate or rational result for tax purposes What is the significance of the activities carried out at each establishment in contributing to the services provided Services where Place of Supply General Rules do not Apply Land and Property Related Services The place of supply of services related to land and buildings is where the actual property is located and not where the supplier belongs This includes: Purchase and sale of Land Estate agents, surveyors, architects, engineers etc involved in land related transactions Hotels and accommodation Construction, alterations, demolition, repairs and maintenance, engineering in relation to land and buildings Admission to Event The place of supply for admission to an event is where the event takes place. By events we mean sporting, conferences, exhibitions, music events etc. For Example - a company in the UK buying tickets to a rugby match held in Ireland to entertain staff. The place of supply in this case is Ireland. Note: The following services provided Are not Admission to an Event and the place of supply of these services is covered under the general rule - B2C = where the supplier is located and B2B where the customer is located. (Unless only the admission is provided which gives the right to attend an event) Sporting event services such as appearances by sports personalities for a fee or organisation of race events or tournaments Educational services such as conferences organised and supplied to businesses. Entertainment services such as performances by artists, DJ's where their services are hired. Exhibitions Hire of Means of Transport The hire of short term transport (30 continuous days for cars, vans, bikes, scooters etc and 90 continuous days for vessels) is to be treated as made in the country in which the means of transport is actually put at the disposal of the person by whom it is hired. So if a van is hired by a UK business from a French van hire company to use while setting up its French office, then UK reverse charge VAT would not be applicable as the place of supply is in France and thus outside the scope of UK VAT. Catering and Restaurant Services The place of supply rules for restaurant and catering services is the country where the actual physical supply takes place. Use and Enjoyment Rules Use and employment rules apply mainly to telecommunications, broadcasting and electronically supplied services. Basically the use and enjoyment for these services take place in the country they are consumed and as such do not follow the general rule. For Example: If a UK business provides telecommunication services to a UK business customer but the actual services are consumed in France, then the place of supply is France and is outside the scope of UK VAT. If a Spanish satellite broadcaster provides broadcasting services to UK consumers, then the place of supply would be where the broadcasts are consumed and thus UK VAT will be applicable. If a UK business purchases software from a Irish vendor and is used in its Jersey office only, then the supply would be outside the scope of UK VAT as the services are consumed in Jersey. If a German company purchased web hosting services from a US company and the web hosting is used primarily in the UK, then as these services are consumed in the UK VAT is applicable. -Contains public sector information licensed under the Open Government Licence v3.0.

Read our comprehensive guide on the VAT liability of supplying staff or labour as a service to either external counterparties or within a VAT group. Introduction The supply of staff occurs when a company provides its employees or directors to another organisation for consideration and the receiving company directs and exercises day to day control over the employee or director while working in their organisation. The key point is that the recipient company does not employ the staff provided but is responsible for their day to day direction in carrying out whatever work is required. The VAT liability for the supply of staff is as follows: Supply of staff from a UK business to a UK business = Standard Rated 20% Supply of staff from a UK business to a non UK business = Outside the scope of VAT. (Zero Rated) Supply of staff from a non UK Business to a business located in the UK( incl Isle of Man) = Reverse Charge VAT applicable at 20% Consideration for a supply = Value of what you are given in return for providing the required services and VAT must be accounted for on the full amount. Consideration will include the following (received from the recipient company and or paid to the staff member by the recipient company) and VAT should be applied to the sum total of these: Fees for staff provision Salary National Insurance Bonuses Pension contributions Paymaster Servic es Paymaster services occurs where there a number of associated companies that employ their own staff but one company has the role of paying the salaries and expenses to all the employees of each company. The recovery of the salaries and expenses by the paymaster company from the other companies is not a supply of staff and is outside the scope of VAT. Where the paymaster charges the other associated companies a fee for acting as paymaster, then this fee is subject to VAT. Supply of Directors The Supply of Directors occurs in the following circumstances and 20% VAT is applicable on any fees charged: Company A supplies a Director or Employee to serve as a Director at Company B for a Fee Company A provides a Director or Employee to serve at a number of associated Companies B, C, D and E. Accountancy Firm A supplies one of its Directors to serve as an accountant at Company B Company A invests and takes a majority stake in company B and appoints one of its Directors to the board to provide day to day specialism in running the target company for a fee Staff Employment Agencies Employment agencies can act as either principal or agent when they are involved is the provision of staff. A company that employs workers under its own contract of services and pays their salary then provides them to another company as a supply of staff = 20% VAT applicable on total charge collected from recipient company. Staff umbrella companies operate in this way. A company that acts a an agent to another company by only finding and introducing staff to that company then this is not a supply of staff but rather an introductory service = 20% VAT applicable on agency fee -Contains public sector information licensed under the Open Government Licence v3.0. Supply of Staff and VAT