Since 1 January 2021, the UK VAT rules in respect of digital services now follow the “place of supply” rules. This change does not affect the provision of live webinars.
What are the rules covering the provision of live webinars?
Education or training services delivered by a person over the internet or another electronic network (including via webinars), are not considered to be “electronically supplied” because an actual person is involved in the delivery.
This means that webinars are covered by the general rules for services, instead of the new rules on digital services.
What are the general rules for services?
The standard rules are: –
- Business to consumer (B2C) sales – these sales are subject to UK VAT.
- Business to business (B2B) sales – these sales are zero rated if businesses can prove that their customers are “engaging in business”.
Under the rules, a consumer is considered to be a: –
- Private individual;
- Charity, government department or other body which has no business activities; or
- Natural or legal person who receives supplies wholly for a private purpose.
A business includes customers that have both business and non-business activities. This can therefore include some charities, local authorities and government departments.
What does “engaging in business” mean?
HMRC have outlined their criteria for what ‘engaging in business’ means: –
“Where the B2B rule applies you should obtain commercial evidence showing that your customer is in business and belongs outside the UK. For EU customers their VAT registration numbers is the best evidence that your EU customer is in business. If your customer is unable to provide a VAT number, you can accept alternative evidence. This includes certificates from fiscal authorities or other commercial documents indicating the nature of the customer’s activities in their home country. Such evidence should be kept as part of your records.”
What action is required?
A simple way to verify a customer’s EU VAT number is to use the VIES validation tool – available at https://ec.europa.eu/taxation_customs/vies/vatRequest.html. This is a straightforward, free tool that enables EU VAT numbers to be verified by the European Commission.
If you have any queries about how these rules will affect you, please get in touch with your usual RG contact.