Finance Bill

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Session 2008 - 09
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Finance Bill

Finance Bill
Schedule 36 — VAT: place of supply of services etc
Part 1 — Amendments coming into force in 2010
292

Schedule 36
Section 75

VAT: place of supply of services etc
Part 1
Amendments coming into force in 2010
1
VATA 1994 is amended as follows.
5
2
In section 6(14A) (time of supply), omit “In relation to any services of a
description specified in an order under section 7(11),”.
3     (1)
Section 7 (place of supply) is amended as follows.
      (2)
In subsection (1), omit “or services”.
      (3)
Omit subsection (10).
10
      (4)
Subsection (11), omit “or services” (in each place).
      (5)
In the heading, insert at the end “of goods”.
4
After that section insert—
“7A
Place of supply of services
(1)
This section applies for determining, for the purposes of this Act, the
15
country in which services are supplied.
(2)
A supply of services is to be treated as made—
(a)
in a case in which the person to whom the services are
supplied is a relevant business person, in the country in
which the recipient belongs, and
20
(b)
otherwise, in the country in which the supplier belongs.
(3)
The place of supply of a right to services is the same as that in which
the supply of the services would be treated as made if made by the
supplier of the right to the recipient of the right (whether or not the
right is exercised); and for this purpose a right to services includes
25
any right, option or priority with respect to the supply of services
and an interest deriving from a right to services.
(4)
For the purposes of this Act a person is a relevant business person in
relation to a supply of services if the person—
(a)
is a taxable person within the meaning of Article 9 of Council
30
Directive 2006/112/EC,
(b)
is registered under this Act,
(c)
is identified for the purposes of VAT in accordance with the
law of a member State other than the United Kingdom, or
(d)
is registered under an Act of Tynwald for the purposes of any
35
tax imposed by or under an Act of Tynwald which
corresponds to value added tax,

and the services are received by the person otherwise than wholly for
private purposes.
(5)
Subsection (2) has effect subject to Schedule 4A.
40
(6)
The Treasury may by order—

Finance Bill
Schedule 36 — VAT: place of supply of services etc
Part 1 — Amendments coming into force in 2010
293

(a)
amend subsection (4),
(b)
amend Schedule 4A, or
(c)
otherwise make provision for exceptions from either or both
of the paragraphs of subsection (2).
(7)
An order under subsection (6) may include incidental, supplemental,
5
consequential and transitional provision.”
5     (1)
Section 8 (reverse charge on supplies received from abroad) is amended as
follows.
      (2)
For subsections (1) and (2) substitute—
“(1)
Where services are supplied by a person who belongs in a country
10
other than the United Kingdom in circumstances in which this
subsection applies, this Act has effect as if (instead of there being a
supply of the services by that person)—
(a)
there were a supply of the services by the recipient in the
United Kingdom in the course or furtherance of a business
15
carried on by the recipient, and
(b)
that supply were a taxable supply.
(2)
Subsection (1) above applies if—
(a)
the recipient is a relevant business person who belongs in the
United Kingdom, and
20
(b)
the place of supply of the services is inside the United
Kingdom,

and, where the supply of the services is one to which any paragraph
of Part 1 or 2 of Schedule 4A applies, the recipient is registered under
this Act.”
25
      (3)
After subsection (4) insert—
“(4A)
Subsection (1) does not apply to services of any of the descriptions
specified in Schedule 9.”
      (4)
In subsection (5), for “add to, or vary, Schedule 5” substitute “amend
subsection (4A) by altering the descriptions of services specified in that
30
subsection”.
      (5)
Omit subsection (6).
      (6)
In subsection (7)—
(a)
for “add to or vary Schedule 5” substitute “amend subsection (4A)”,
and
35
(b)
for “addition to or variation of that Schedule” substitute
“amendment of that subsection”.
      (7)
In subsection (8)—
(a)
for “addition to or variation of that Schedule” substitute
“amendment of subsection (4A)”, and
40
(b)
for “the Schedule” substitute “that subsection”.

Finance Bill
Schedule 36 — VAT: place of supply of services etc
Part 1 — Amendments coming into force in 2010
294

6
For section 9 substitute—
“9
Place where supplier or recipient of services belongs
(1)
This section has effect for determining for the purposes of section 7A
(or Schedule 4A) or section 8, in relation to any supply of services,
whether a person who is the supplier or recipient belongs in one
5
country or another.
(2)
A person who is a relevant business person is to be treated as
belonging in the relevant country.
(3)
In subsection (2) “the relevant country” means—
(a)
if the person has a business establishment, or some other
10
fixed establishment, in a country (and none in any other
country), that country,
(b)
if the person has a business establishment, or some other
fixed establishment or establishments, in more than one
country, the country in which the relevant establishment is,
15
and
(c)
otherwise, the country in which the person’s usual place of
residence is.
(4)
In subsection (3)(b) “relevant establishment” means whichever of the
person’s business establishment, or other fixed establishments, is
20
most directly concerned with the supply.
(5)
A person who is not a relevant business person is to be treated as
belonging in the country in which the person’s usual place of
residence is.
(6)
In this section “usual place of residence”, in relation to a body
25
corporate, means the place where it is legally constituted.”
7     (1)
Section 43 (groups of companies) is amended as follows.
      (2)
In subsection (2A)—
(a)
in paragraph (a), for “falling within Schedule 5” substitute “to which
section 7A(2)(a) applies made”, and
30
(b)
in paragraph (c)—
(i)
omit “falling within paragraphs 1 to 8 of Schedule 5”, and
(ii)
insert at the end “and section 7A(2)(a) applied to the supply”.
      (3)
In subsection (2D)—
(a)
in paragraph (c)—
35
(i)
omit “falling within paragraphs 1 to 8 of Schedule 5”, and
(ii)
insert at the end “and section 7A(2)(a) applied to the supply”,
and
(b)
in the words after the paragraphs, for “falling within that Schedule,”
substitute “to which section 7A(2)(a) applies,”.
40
      (4)
In subsection (2E)(b), for “there are services falling within paragraphs 1 to 8
of Schedule 5 which, if used by the transferor for making supplies falling
within that Schedule,” substitute “there is a supply to which section 7A(2)(a)
applies of services which, if used by the transferor for making such a
supply,”.
45

Finance Bill
Schedule 36 — VAT: place of supply of services etc
Part 1 — Amendments coming into force in 2010
295

8     (1)
Section 96 (interpretation) is amended as follows.
      (2)
In subsection (1), after the definition of “regulations” insert—
““relevant business person” has the meaning given by section
7A(4);”.
      (3)
In subsection (8), omit “(subject to any provision made under section 8(6))”.
5
9
Section 97(4)(a) (orders subject to requirement of Parliamentary approval
after making), after “5(4)” insert “, 7A(6)”.
10
Section 97A(1) (place of supply orders: transitional provision), for “on or
after 17th March 1998 under section 7(11)” substitute “under section 7A(6)”.
11
After Schedule 4 insert—
10
“Schedule 4A
Section 7A

   Place of supply of services: special rules
Part 1
   General exceptions
Services relating to land
15
1     (1)
A supply of services to which this paragraph applies is to be
treated as made in the country in which the land in connection
with which the supply is made is situated.
      (2)
This paragraph applies to—
(a)
the grant, assignment or surrender of any interest in or
20
right over land,
(b)
the grant, assignment or surrender of a personal right to
call for or be granted any interest in or right over land,
(c)
the grant, assignment or surrender of a licence to occupy
land or any other contractual right exercisable over or in
25
relation to land (including the provision of holiday
accommodation, seasonal pitches for caravans and
facilities at caravan parks for persons for whom such
pitches are provided and pitches for tents and camping
facilities)
30
(d)
the provision in an hotel, inn, boarding house or similar
establishment of sleeping accommodation or of
accommodation in rooms which are provided in
conjunction with sleeping accommodation or for the
purpose of a supply of catering,
35
(e)
any works of construction, demolition, conversion,
reconstruction, alteration, enlargement, repair or
maintenance of a building or civil engineering work, and
(f)
services such as are supplied by estate agents, auctioneers,
architects, surveyors, engineers and others involved in
40
matters relating to land.
      (3)
In sub-paragraph (2)(c) “holiday accommodation” includes any
accommodation in a building, hut (including a beach hut or

Finance Bill
Schedule 36 — VAT: place of supply of services etc
Part 1 — Amendments coming into force in 2010
296

chalet), caravan, houseboat or tent which is advertised or held out
as holiday accommodation or as suitable for holiday or leisure use.
      (4)
In sub-paragraph (2)(d) “similar establishment” includes premises
in which there is provided furnished sleeping accommodation,
whether with or without the provision of board or facilities for the
5
preparation of food, which are used by, or held out as being
suitable for use by, visitors or travellers.
Passenger transport
2     (1)
A supply of services consisting of the transportation of passengers
(or of any luggage or motor vehicles accompanying passengers) is
10
to be treated as made in the country in which the transportation
takes place, and (in a case where it takes place in more than one
country) in proportion to the distances covered in each.
      (2)
For the purposes of sub-paragraph (1) transportation which takes
place partly outside the territorial jurisdiction of a country is to be
15
treated as taking place wholly in the country if—
(a)
it takes place in the course of a journey between two points
in the country (whether or not as part of a longer journey
involving travel to or from another country), and
(b)
the means of transport used does not (except in an
20
emergency or involuntarily) stop, put in or land in another
country in the course of the journey between those two
points.
      (3)
For the purposes of sub-paragraph (1) a pleasure cruise is to be
regarded as the transportation of passengers (so that services
25
provided as part of a pleasure cruise are to be treated as supplied
in the same place as the transportation of the passengers).
      (4)
In sub-paragraph (3) “pleasure cruise” includes a cruise wholly or
partly for education or training.
Hiring of means of transport
30
3     (1)
A supply of services consisting of the short-term hiring of a means
of transport is to be treated as made in the country in which the
means of transport is actually put at the disposal of the person by
whom it is hired.

But this is subject to sub-paragraphs (3) and (4).
35
      (2)
For the purposes of this Schedule the hiring of a means of
transport is “short-term” if it is hired for a continuous period not
exceeding—
(a)
if the means of transport is a vessel, 90 days, and
(b)
otherwise, 30 days.
40
      (3)
Where—
(a)
a supply of services consisting of the hiring of a means of
transport would otherwise be treated as made in the
United Kingdom, and
(b)
the services are to any extent effectively used and enjoyed
45
in a country which is not a member State,

Finance Bill
Schedule 36 — VAT: place of supply of services etc
Part 1 — Amendments coming into force in 2010
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the supply is to be treated to that extent as made in that country.
      (4)
Where—
(a)
a supply of services consisting of the hiring of a means of
transport would otherwise be treated as made in a country
which is not a member State, and
5
(b)
the services are to any extent effectively used and enjoyed
in the United Kingdom,

the supply is to be treated to that extent as made in the United
Kingdom.
Cultural, educational and entertainment services etc
10
4     (1)
A supply of services to which this paragraph applies is to be
treated as made in the country in which the services are physically
carried out.
      (2)
This paragraph applies to the provision of—
(a)
services relating to cultural, artistic, sporting, scientific,
15
educational, entertainment or similar activities (including
fairs and exhibitions), and
(b)
ancillary services relating to such activities, including
services of organisers of such activities.
Restaurant and catering services: general
20
5     (1)
A supply of services to which this paragraph applies is to be
treated as made in the country in which the services are physically
carried out.
      (2)
This paragraph applies to the provision of restaurant services and
the provision of catering services, other than the provision of
25
services to which paragraph 6 applies.
EC on-board restaurant and catering services
6     (1)
A supply of services consisting of
(a)
the provision of restaurant services, or
(b)
the provision of catering services,
30

on board a ship, aircraft or train in connection with the
transportation of passengers during an intra-EC passenger
transport operation is to be treated as made in the country in
which the relevant point of departure is located.
      (2)
An intra-EC passenger transport operation is a passenger
35
transport operation which, or so much of a passenger transport
operation as,—
(a)
has as the first place at which passengers can embark a
place which is within the EC,
(b)
has as the last place at which passengers who embarked in
40
a member State can disembark a place which is within the
EC, and
(c)
does not include a stop at a place which is not within the
EC and at which passengers can embark or passengers
who embarked in a member State can disembark.
45

Finance Bill
Schedule 36 — VAT: place of supply of services etc
Part 1 — Amendments coming into force in 2010
298

      (3)
“Relevant point of departure”, in relation to an intra-EC passenger
transport operation, is the first place in the intra-EC passenger
transport operation at which passengers can embark.
      (4)
A place is within the EC if it is within any member State.
      (5)
For the purposes of this paragraph the return stage of a return
5
passenger transport operation is to be regarded as a separate
passenger transport operation; and for this purpose—
(a)
a return passenger transport operation is one which takes
place in more than one country but is expected to end in
the country in which it begins, and
10
(b)
the return stage of a return passenger transport operation
is the part of it which ends in the country in which it began
and begins with the last stop at a place at which there has
not been a previous stop during it.
Hiring of goods
15
7     (1)
Where—
(a)
a supply of services consisting of the hiring of any goods
other than a means of transport would otherwise be
treated as made in the United Kingdom, and
(b)
the services are to any extent effectively used and enjoyed
20
in a country which is not a member State,

the supply is to be treated to that extent as made in that country.
      (2)
Where—
(a)
a supply of services consisting of the hiring of any goods
other than a means of transport would otherwise be
25
treated as made in a country which is not a member State,
and
(b)
the services are to any extent effectively used and enjoyed
in the United Kingdom,

the supply is to be treated to that extent as made in the United
30
Kingdom.
Telecommunication and broadcasting services
8     (1)
This paragraph applies to a supply of services consisting of the
provision of—
(a)
telecommunication services, or
35
(b)
radio or television broadcasting services.
      (2)
In this Schedule “telecommunication services” means services
relating to the transmission, emission or reception of signals,
writing, images and sounds or information of any nature by wire,
radio, optical or other electromagnetic systems, including—
40
(a)
the related transfer or assignment of the right to use
capacity for such transmission, emission or reception, and
(b)
the provision of access to global information networks.
      (3)
Where—
(a)
a supply of services to which this paragraph applies would
45
otherwise be treated as made in the United Kingdom, and