A limited company is operating as a Maths lecturer providing educational services, both directly to individual students, and to businesses who supply services on to their own students all over the world. Due to the current pandemic, they have had to adjust their working practices and now deliver all of their classes via live internet streaming. What is the VAT position of this work?
The VAT treatment will vary depending on whether their customers are individuals or businesses and where their customers belong.
Supplies to customers who are in business, will fall under the business to business general rule meaning the place of supply is where the business customer belongs. If the customer belongs outside the UK it therefore means that the supply is outside the scope of UK VAT. A VAT number is best evidence that your customer is in business. However, if the business customer doesn’t have one, for example because they are based outside of the EU, then you can accept alternative evidence such as certificates from fiscal authorities or other commercial documents indicating the nature of the customer’s activities in their home country.
Business to consumer supplies are less straight-forward. Where the consumer belongs in either the UK or the EU, the supply falls under the business to consumer general rule, with the place of supply being where the supplier belongs. Although streamed via the internet, these do not fall under the special rules for electronically supplied digital services, as they are performed live with significant human intervention. Therefore, the VAT MOSS rules do not apply.
For business to consumer supplies of education to individuals based outside of the EU the place of supply is again where the customer belongs and so outside the scope of UK VAT.
This brief article is further proof that VAT law is very complex. Where you have any doubt about your own VAT position, or require some clarification, please don’t hesitate to contact us, 01473 558866.
Source: Croner Taxwise