VQOTW: Use and Enjoyment

We have been approached by a new client who is VAT registered, and their business activity is the hire of audio visual equipment. They are looking to invoice a Canadian music company for the hire of sound and lighting equipment. The Canadian company does not have a presence in the UK and the equipment will be hired for a period of two weeks whilst the singer tours over here. We believe this is a business to business (B2B) general rule supply, therefore the place of supply is where the customer belongs and therefore outside the scope of UK vat; is that correct?

B2B supplies of services fall under the general rule, and the supply is made where the customer belongs, unless it falls into any the exceptions set out in VAT Notice 741A section 6.4.

As the letting on hire of goods, your client’s supply will fall under the use and enjoyment exception and this ensures taxation takes place where the services are used and enjoyed. The following services are covered by the rules:

  • The letting on hire of goods – including the means of transport
  • B2B electronically supplied services
  • B2B telecommunication services
  • B2B repairs to goods under an insurance claim
  • Radio and television broadcasting services.

The use and enjoyment provisions apply in either of the following scenarios: where the place of supply would be:

  • The UK, but the services are effectively used and enjoyed outside the EU, or
  • Outside the EU, but the services are effectively used and enjoyed in the UK.

This is confirmed in section 13 of Notice 741A: https://www.gov.uk/guidance/vat-place-of-supply-of-services-notice-741a#sec13

In summary, the supply of AV equipment to a business customer in Canada is a general rule supply so the place of supply would be Canada, where the customer belongs. However, as the services are effectively used in the UK then the use and enjoyment provisions apply and render the supply liable to VAT in the UK; in this case, a standard rated supply.

The Canadian company should be registering for VAT in the UK as a Non-Established Taxable Person (NETP) if it is putting on its own events in the UK. There is a nil threshold for NETPs and they cannot work their way up to the £85,000 for VAT registration purposes. Being UK VAT registered, the company would recover the VAT charged by your client.


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VAT Advisor
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Priyesh has worked as a VAT Compliance Officer for HMRC since 2013 prior to joining Croner Taxwise. He initially worked in Small and Medium Enterprises before moving on to Wealthy & Midsize Businesses in 2014 where he gained a broad understanding of VAT and trained new VAT entrants.

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