Yes. You are correct in your understanding of the Place of Supply but having established that, it is necessary to consider the liability. Supplies in the UK can be standard rated, reduced rated, zero-rated, or exempt. Notice 741A in section 16 sets out the circumstances when certain services carried out in the UK are zero-rated. The services potentially covered by this rule are:
- Intermediary services
- Training performed for overseas governments, and
- Work on goods for export.
Work on goods for export from the EU is zero-rated provided the following conditions are met:
- The goods on which the work is to be carried out must have been obtained, acquired into, or imported to the EU for the purpose of being worked on. This means that if a car from the US was being used in the UK and broke down and needed repair, this would not qualify for zero-rating even if it would then be exported. However, in your client’s case, the car has been imported specifically to be worked on, so this condition would be met.
- The goods must not be used in the UK between the time of leaving the supplier’s premises and exportation.
- On completion of the work, the goods are intended to be, and are, exported from the EU by either the supplier, or someone acting on his behalf or, if the customer belongs outside the EU, by the customer or someone acting on his behalf. Your client would need to obtain and keep satisfactory official or commercial evidence of the export. There is no specific time limit for the export.
Therefore, as long as your client is able to meet these, he should zero rate the supply.
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