Legal Edge ; John Pindard, Partner at South West Law Firm Foot Anstey, Looks at New Vat Rules

Summary

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THE New Year will involve many businesses having to re-learn what they thought they knew about VAT and the place of supply rules. As a result of changes to the place of supply rules, some of which are already in effect from January 1 2010, with more changes scheduled to take place in 2011 and 2013, businesses who make or receive international supplies of services will have to be aware that there has been a fundamental change to the basic rules.

Before January 1, 2010 the basic rule was that VAT liability was based on the place where the supplier had established its business. From January 1, 2010 the new basic rule for business-to-business supplies is that liability for VAT will depend on the place where the customer is established. For example, if a UK business supplies services to a customer based in Spain, that supply will be taxed according to Spanish VAT rules. The supply falls outside the scope of UK VAT and the UK supplier need not account for UK VAT. The customer in Spain, however, will need to account for the equivalent of VAT in Spain by making a reverse charge calculation.

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Legal Edge ; John Pindard, Partner at South West Law Firm Foot Anstey, Looks at New Vat Rules

To further complicate matters, one constant remains; namely, there are several exceptions to ...

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