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UK revises VAT rules covering insured goods

UK revises VAT rules covering insured goods VAT rules. United Kingdom

The UK Government has tabled the Value Added Tax (place of supply of services: exceptions relating to supplies made to relevant business person) order 2016, which will take effect for supplies on or after October 1, 2016.

The change affects repair services following insurance claims which meet the following criteria: the supply is pursuant to a claim made under a contract of insurance, and the supply is made to a relevant business person who is not the person insured.

In such circumstances, instead of being taxed in the UK, if the services are effectively used and enjoyed outside the EU, the supply is to be treated as made where it is used and enjoyed. Equally, where a supply of such services would typically be treated as made outside the EU, if the services are effectively used and enjoyed in the UK they will be subject to UK VAT.

The change applies in the case of a supply of services consisting of the repair of tangible movable property (such as cars or mobile telephones) where the supply is made in pursuance of a contract of insurance and is made, for example, to the insurer rather than to the insured person.

Author: Sergey Panov
managing partner Finance Business Service
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