As we end the first week of the new year,  many businesses are gearing up gradually to doing their best to carry on and come to terms with the post Brexit rules , understandably, there are areas of Vat still causing confusion out there to the businesses operating through Europe for example, businesses operating in the freight transport and associated services,  they may supply these services to customers that are businesses and also those NOT in business, So what is the position post Brexit ?

From the 01 January 2021, when the transition period ended for the UK leaving the EU, the place of supply of freight transport and associated services changed. Previously the zero-rate applied in respect of transport into and out of the EU. Now it applies in respect of transport into and out of the UK.

When looking at the VAT treatment of supplies one must look at the following:

  • The place of supply of your services, which follows the status of your customer, and
  • The liability of the supply, which follows the place of supply of your services

Customer in business (B2B)

Where supplies of freight transport and related services are to a customer ‘in business’ then the B2B general rule applies, the place of supply being where the customer belongs for the purpose of receiving your supply.

However, where the supply of these services would have a place of supply in the UK under the general rule, but take place wholly outside the UK, the supply is treated as taking place where performed and is therefore outside the scope of UK VAT.

Examples are set out in VAT Notice 744B section 3.2

Customer not in business (B2C)

Journey

Place of supply

Transport within the UK

UK

Transport between Northern Ireland and EU

where the journey begins

All other journeys

Where transport takes place in proportion to the distance covered

Ancillary transport related services

where physically performed

Examples are set out in VAT Notice 744B section 3.3

Having established that the place of supply is the UK, the supply of freight transport is standard rated other than:

  •  Transportation and related services relating to an import to, or export from, the UK
  • Any other transport of goods from a place within to a place outside the UK and vice versa
  • Handling or storage of ship, train or aircraft cargo (in certain circumstances set out in Notice 744B section 7.

These supplies are zero rated.

VAT Notice 744B has been updated to reflect the changes from 01 January 2021.

We are here to help so get in touch,  Stay calm…live brilliantly…and do at least 3 important or kind things each day! , as we chalk off yet another extraordinary week in the history of humanity, do stay hopeful, safe and compassionate towards each other

Back soon and have a great weekend.

Disclaimer Notice

The information contained in this  article is for general information purposes only and does not constitute advice, Whilst we endeavour to keep the information up-to-date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability for a particular purpose. We recommend that professional advise should be taken from a suitably qualified expert before undertaking any action.

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