This consultation seeks comments on the draft statutory instrument and explanatory memorandum to remove B2C telecommunications from the use and enjoyment provisions. The aim is to ensure the legislation works as intended.

The measure makes telecommunication services supplied to a non-business consumer taxable where that consumer belongs, in accordance with the specific place of supply rule for such services. It brings the UK into line with international guidelines on the place of supply of services, and the practice of the majority of EU member states.

Currently, telecommunication services supplied to UK consumers that are effectively used in the EU are subject to UK VAT, while those effectively used outside the EU are not. Some UK providers currently make adjustments to the VAT they pay to HMRC on monthly fees to allow for non EU use, but do not pass this saving on directly to consumers. Some also assert that uncertainty over the place where consumers will use their mobile phones is created by the use and enjoyment provision, which prevents taxation until use of the phone occurs.

This measure removes any alleged uncertainty as to the place of supply, by making it clear that telecommunication services to non-business consumers will always be taxable where the consumer belongs. HMRC says this ensures that VAT is due on the full consideration paid by UK consumers in relation to pay monthly contracts and will protect future revenue from similar challenges.

The consultation closes on 19 May 2017.

Policy paper Draft legislation: VAT use and enjoyment for telecommunication services is here.