VAT – Relocation of place of supply
HMRC have issued a short briefing notice aimed at businesses within the telecommunications, internet service provision and broadcasting sectors. It is relevant to all those that have moved or are thinking of moving the place of supply of their services from the UK to another EU country.
This type of VAT planning is often used by these types of businesses to benefit from a lower VAT rate in another member state. For example, Luxembourg has a standard VAT rate of 15% which will be lower than the UK’s standard rate when it reverts back to 17.5% on 1 January 2010.
In their briefing notice HMRC make it clear that whilst they accept that businesses have the right to choose where they are based, HMRC will carefully examine all such arrangements. HMRC will challenge arrangements where they consider that there is a fixed establishment in the UK or the lack of sufficient presence in another member state.
HMRC is encouraging businesses wishing to discuss their arrangements to make contact with either their local customer relationship manager or Peter Langton at the Large Business Service, 101 Victoria Street, Bristol, BS1 6DQ Tel: 0117 9838317.