The Value Added Tax (Place of Supply of Services) (Telecommunication Services) Order 2017

EXPLANATORY NOTE

(This note is not part of the Order)

This Order amends Parts 1 (general exceptions), 2 (exceptions relating to supplies made to relevant business person) and 3 (exceptions relating to supplies not made to relevant business person) of Schedule 4A (place of supply of services: special rules) to the Value Added Tax Act 1994 (c. 23) (“the Act”) in relation to supplies of telecommunication services and also makes some necessary consequential amendments to other provisions of the Act.

Section 7A of the Act specifies the general rules for determining the place of supply of services for the purposes of UK value added tax. The general rules set out in section 7A(2) are that, where the supply is made to a private (non-business) customer, the place of supply is treated as the country where the supplier belongs but, where it is made to a business customer, it is treated as the country where the customer belongs. However, section 7A(2) has effect subject to any override in Schedule 4A to the Act (“Schedule 4A”) which provides for exceptions to the general rules in specified circumstances.

The effect of the Order is that, where telecommunication services are supplied to a person other than a ‘relevant business person’ as defined in section 7A(4) of the Act (for example, a private consumer), that supply will be subject to the place of supply rules set out in paragraph 15 (electronically supplied, telecommunication and broadcasting services) of Part 3 of Schedule 4A. The special ‘use and enjoyment’ provisions that were provided for in paragraph 8 (telecommunication and broadcasting services) of Part 1 of Schedule 4A will only apply where such supplies are made to a relevant business person by virtue of the new paragraph 9E (telecommunication services) inserted into Part 2 of Schedule 4A.

The current ‘use and enjoyment’ provisions in relation to supplies of radio and television broadcasting services set out in paragraph 8 (now limited to broadcasting services) of Part 1 of Schedule 4A will remain unchanged.

Article 2 removes references to telecommunication services from paragraph 8 in Part 1 of Schedule 4A.

Article 3 inserts a new paragraph 9E into Part 2 of Schedule 4A to provide for an exception to the general rules in the case of a supply of telecommunication services made to a relevant business person.

Article 4 makes a consequential amendment to paragraph 15 of Part 3 of Schedule 4A.

Articles 5 to 8 make consequential amendments to other provisions that cross refer to the definition of ‘telecommunication services’ in Schedule 4A.

A Tax Information and Impact Note covering this instrument will be published on the website at https://www.gov.uk/government/collections/tax-information-and-impact-notes-tiins.