What happens when a client has a high performance sports car, for example, which can only be serviced in the UK, and they live in Guernsey. Arti Sonpal, tax adviser at Croner Taxwise, asks whether VAT is liable for the work
Question: My client is a VAT registered business operating as a garage. An individual based in Guernsey is sending his car to the UK for a service, and once the service is completed, my client will send the car back to the customer. Will my client be required to charge VAT?
Answer: The first thing to establish here is the place of supply, by considering the nature of the service being provided, and whether the customer is a business-to-business (B2B) or an individual (business-to-customer (B2C)).
The service is that of working on someone else’s goods and therefore in this particular instance the customer is an individual.
The general (or default) rules for B2B supplies and B2C supplies are different. If this had been a B-B supply, it would have fallen under the general place of supply rule, being where the business customer belongs, ie, Guernsey, and therefore outside the scope of VAT.
