7 September 2015
In the Summer Budget on 8 July, the Chancellor announced a consultation on the likely introduction of a “use and enjoyment” rule for certain services. Essentially, this is aimed at services which would be outside the scope of UK VAT by virtue of being treated as outside the EU, but they are brought into the UK VAT net by a use and enjoyment override rule.
Services caught will no doubt include claims fulfilment services where the use and enjoyment is in the UK, but it is intended that advertising services will also be caught. This is probably a reaction to the HMRC loss in Paul Newey t/a Ocean Finance, reported in the July edition of FiscalPress. However, it may also catch non-EU based online gambling operators who advertise for UK players.
The intention is that after consultation the tax will be introduced – early in 2016 – to cover repair services in the UK under an insurance contract which is with an insurer outside the EU. Thereafter, advertising services may be added. HMRC has appealed against the judgment of the Upper Tribunal in Paul Newey so perhaps they will wait for the outcome of that further appeal before deciding on other services to be added. Nevertheless, those likely to be affected should consider responding to the consultation. Unfortunately, nothing has yet appeared on the HMRC website.