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Should you charge overseas customers VAT?

Question

My client provides staff in the entertainment industry and is hiring out a DJ for an event to be held in the UK. The invoice is being sent to a business in Dubai, do we charge VAT?

Answer

Under the Place of Supply of Services rules when this sale is to a business (B2B) we need to look at where the customer belongs. In this case the business is located outside of the EU and so the supply is treated as outside the scope (OSS) of UK VAT and the sale is shown on the VAT return in box 6 only.

What if the customer is in business but is based in the EU?

If the customer is a B2B customer, then the same rule as above is applied i.e. where does the customer belong. This sale is also treated as OSS but as the customer is based in Europe we apply the Reverse Charge (RC). On the VAT return you show it in box 6 only and you will also need to file an EC Sales list return and use indicator 3 for Services.

What if the customer is an individual based outside of the UK?

Where B2C services are provided for entertainment activities, we look at where the event is being performed. As this event takes place in the UK we treat this sale as standard rated for VAT and show on the VAT return in boxes 1 and 4.

What if the customer is in the UK?

This is a normal standard rated activity in the UK and VAT at 20% is applied on the sale to both B2B and to B2C customers. Show on the VAT return in boxes 1 and 4.

The VAT Notice741A Place of Supply of Services gives more information on this topic.

Annette Woods – Qdos Vantage Tax Consultant

21 September 2017

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