The provision of consultancy service that would solely benefit a customer would constitute a taxable supply.

This means when services such as advisory, contract research, market research, analysis of materials, components and processes should have VAT charged when delivered to customers based in the UK.

Similarly, incidental expenses incurred in relation to consultancy work and recharged to a customer, such as travel expenses, would also be subject to VAT at the standard rate, even if no VAT was paid on the original purchase costs.

Consultancy work if a customer is based outside of the United Kingdom

Business to business (B2B)

If the consultancy work is carried out for a client based outside the UK, it would be subject to a special rule. Generally, the place of supply rule is that, for B2B supply of services, the tax is usually due in the country of the customer. In other words, VAT is due in the country in which the service is consumed rather than where the supplier is established. For example, If the University of Bath supplies consultancy service to a business based in Malawi, the university would not charge VAT on its invoice as the place of supply would be in Malawi where the service would be consumed.

Supply of consultancy service to a business based overseas should be treated as outside of the scope for VAT purposes, which means UK VAT should not be charged.

Even though we would do not need to charge VAT when making supplies to business customer who is based overseas, sometimes withholding tax might be deducted from the amount due to the University of Bath by the service recipient. This withholding tax is the tax due by a foreign business for making supply in another country. The UK has tax treaties with several countries allowing for withholding tax not to be deducted from income generated foreign territories. Please contact vatqueries@bath.ac.uk with queries relating to this area.

Business to consumer (B2C)

For B2C supply of service i.e. service supplied to individual, the general rule is that place of supply is where the supplier belongs. If the supplier is based here in the UK, then VAT would be due in the UK irrespective of where the customer is located. For B2C tax is to be charged just as if the customer is here in the UK.

Exceptions to the general rule for the place of supply of services

There are several exemptions to the general place of supply rules, for instance:

Land related:Place of supply is usually where the land is located.

Admission to events and ancillary services: Place of supply is usually where the event takes place, for example, if the event such as conference, exhibition, meeting etc. takes place here in the UK, then UK VAT is due.

Receiving consultancy services from overseas

When buying consultancy services from a business based overseas, as the place of supply would be in the country of the business receiving the service is situated i.e. here in the UK, VAT would not generally be charged by the overseas business. But reverse charge VAT will be due on the value of the payment.

It is worth noting that, for services received from lecturers and academic professors based overseas acting in their own capacity, where these services relate to the delivery of education, such as reviewer or study instruments, then they can be seen as them providing private tuition which would be exempt for VAT purposes. As such VAT would not be charged by the individuals providing these services and reverse charge would not be due.