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Sales of services abroad

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The following information is for general guidance only and should not be taken as definitive VAT advice, since individual circumstances may vary. To determine the VAT treatment for your particular transactions please refer to HMRC guidance or seek advice from an accountant.

Introduction

If you are a UK business and sell a service to an overseas customer, you need to determine the place of supply (using HMRC VAT Notice 741A) to know whether or not the transaction is outside the scope of UK VAT, regardless of where the customer is located.

Place of supply is the UK: UK VAT is due

If the place of supply is the UK, it is subject to UK VAT and VAT should be charged in the same way as for a normal UK sale.

Place of supply is outside the UK: Outside the scope of UK VAT

If the place of supply is outside the UK, it is outside the scope of UK VAT.

However, the net value of such sales should be included in Box 6 of the VAT return, according to para 3.7 of HMRC VAT Notice 700/12.

Therefore enter the sale in the same method described in Entering a zero-rate sale. This is not actually a zero-rated sale, but this will serve the purpose of including the sale in Box 6 of the VAT return.

You might have obligations for VAT/sales tax in the country where the supply is determined to take place. If so, the foreign VAT/sales tax can be accounted for as described in VAT or sales tax due in other countries.

Note:

For VAT purposes:

The Isle of Man is part of the UK

The Channel Islands are outside the UK

Northern Ireland is part of the UK for sales of services

Northern Ireland is part of the UK for sales of goods to all countries except EU countries

Northern Ireland is part of the EU for sales of goods to EU countries