Place of supply for B2C digital services to Jersey/Guernsey post-Brexit
Client is a UK sole trader selling digital downloads. A chunk of sales are to Jersey and Guernsey individual customers. Pre-2021 this was clear — Channel Islands are outside the EU but the UK had its own rules.
Post-Brexit: CI are outside the UK VAT area. But my read is that for B2C digital services the place of supply is where the customer belongs. If the customer is in Jersey, place of supply is Jersey — outside UK VAT scope. No VAT.
HMRC's guidance on this is particularly unhelpful. Anyone handling CI B2C digital sales and willing to confirm the treatment?
2 replies
CI out of scope of UK VAT is right. For the threshold question — Schedule 1 VATA para 1(1) defines the threshold by reference to "taxable supplies". Out-of-scope supplies aren't taxable supplies, so they don't count towards the £90K.
The confusion is because HMRC's notice 700/1 sometimes uses "turnover" loosely. Stick with the statute — out-of-scope CI sales don't push them over the threshold.
clarifying my own question: the issue is Schedule 4A paragraph 15 of VATA 1994 — the UK equivalent of the EU "use and enjoyment" rule. it treats B2C electronically supplied services to non-UK customers as supplied where the customer belongs.
CI = non-UK. so place of supply = CI = out of scope of UK VAT. sole trader still counts the sale towards the £90K registration threshold (because the threshold is based on UK taxable turnover but HMRC's guidance treats out-of-scope sales as part of turnover for some threshold tests, not others — this is the unclear bit).
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