This is a topical and indeed perennial question which has had an extra twist added post-Brexit. Whilst business to business (B2B) supplies of professional services, such as those of an accountant or tax advisor were and continue to be treated as being supplied where the recipient belongs, in line with the place of supply of services general rule; a different treatment used to apply if the recipient were a non-resident individual (B2C).
Pre-Brexit treatment differentiated between EU and non-EU residents. Schedule 4A paragraph 16 of the VAT Act 1994 provided for the supplies of professional services to non-EU consumers to be supplied where the customer belonged and hence outside the scope of UK VAT; whereas supplies to EU consumers were taxed under the B2C general rule where the supplier belonged, so subject to UK VAT.
Post-Brexit, Schedule 4A paragraph 16 has now been extended to include all overseas B2C supplies of professional services regardless of whether the recipient is EU or non-EU resident. This is now confirmed in the updated VAT Place of Supply of Services manual (https://www.gov.uk/hmrc-internal-manuals/vat-place-of-supply-services/vatposs13000) which also details the other services covered by the same legislation.
It should be noted that for VAT purposes an individual is deemed to belong according to HMRC as follows: “The usual place of residence of a private individual is not defined in the law. We interpret the phrase as meaning the one country where the individual spends most of their time for the period in question. It is likely to be the country where the individual has set up their home, lives with their family and is in full time employment.”
https://www.gov.uk/hmrc-internal-manuals/vat-place-of-supply-services/vatposs04600 provides further commentary on asylum seekers and transitory visitors.
A further point is that if tax return services are being provided to a non-resident landlord with a UK rental property, the rental property does not give that landlord a UK place of belonging purely on its own merits. As property letting is a business activity for VAT purposes, the supply could be treated as B2B anyway. VAT Notice 741A https://www.gov.uk/guidance/vat-place-of-supply-of-services-notice-741a#sec3 does state:
“a company with a business establishment overseas that owns a property in the UK which it leases to tenants – the property does not in itself create a fixed establishment, but, if the company has UK offices and staff or appoints a UK agent or representative (such as a subsidiary company acting on their instructions) to carry on its business, this creates a fixed establishment in the UK”.
But it is our understanding that using a third party managing agent for whom the landlord is just one of its clients does not create a UK place of belonging. The issues are when the agency acts like a branch with the sole remit to take decisions and manage the property as if they were landlord.
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