HM Revenue and Customs Brief 13/10
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Issued 17 March 2010
VAT - Place of Supply of freight transport and associated services - used
and enjoyed outside the EU
This Revenue & Customs Brief announces a temporary administrative easement in
relation to business to business (B2B) supplies of freight transport (or
services closely associated with freight transport) which are physically
performed wholly outside the EU.
Who needs to read this?
UK based businesses making or receiving supplies of freight transport (or
services closely associated with freight transport) where the services are
physically performed wholly outside the EU.
Until 1 January 2010, the place of supply of freight transport and associated
services was the country where the activity physically took place, to the extent
that it took place there. That meant that supplies physically performed outside
the EU were outside the scope of VAT. Transportation related to imports to and
exports from the EU could have a place of supply both within and outside the EU
and, to the extent they were performed within the EU, the VAT liability was at
From 1 January 2010, business to business (B2B) supplies of freight transport
and associated services became subject to the new B2B general rule for place of
supply of services - where the business customer belongs - regardless of the
place of physical performance. This means that, where the customer is in the UK,
the place of supply is the UK even if the supply physically takes place wholly
outside the EU. As zero rating only applies to supplies in connection with EU
imports and exports, the liability of supplies wholly outside the EU is
standard-rated. That means that either the UK-based customer must perform a
reverse charge for the supply (if the supplier is outside the UK) or the
supplier needs to account for UK VAT on the supply.
HM Revenue & Customs (HMRC) policy
We have become aware (via UK businesses and charities) that this change has
had a real impact, either in terms of increasing administrative burdens (with no
revenue impact for the UK) or, in some cases, resulting in a real VAT cost. We
recognise that this change in law has produced an unintended anomaly in the
treatment of supplies wholly enjoyed outside the EU, which may also be taxed
locally in the place of performance.
With immediate effect, where a supply of freight transport (or services
closely associated with freight transport) would be treated as supplied in the
UK, it will not be treated as supplied in the UK if the use and enjoyment of the
services is outside the EU. This administrative easement is being introduced as
a temporary measure to allow time for consideration of a more permanent
Past supplies and claims
This treatment applies from 15 March 2010; it is not retrospective.
HMRC guidance will be updated to reflect this change.
If you have any further queries, please contact our VAT Helpline on Tel 0845
010 9000, or by email, or by writing to:
HM Revenue & Customs
National Advice Service
Written Enquiries Section
About the Author
© Crown Copyright 2010.
A licence is needed to reproduce this article and has been republished for
educational / informational purposes only. Article reproduced by permission of
HM Revenue & Customs under the terms of a Click-Use Licence. Tax briefs are
updated regularly and may be out of date at time of reading.
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Article Published/Sorted/Amended on Scopulus 2010-06-14 12:01:34 in Tax Articles