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use and enjoyment telecommunications

Use and enjoyment VAT provisions for telecommunication services – Consultation

Gareth Bevan 26 April 2017 No comments

In the Spring Budget 2017 the government announced that it would remove the use and enjoyment VAT provisions for business to consumer (B2C) telecommunication services. This means that UK VAT will now be charged on all telecommunication services used outside the EU by UK consumers. This change will bring the UK rules in line with the international approach agreed by the OECD, and the practice in most other EU member states.

Currently, telecommunication services supplied to UK consumers that are effectively used in the EU are subject to UK VAT, but those services effectively used outside the EU are not. Some UK providers currently adjust the VAT they pay to HMRC on monthly fees to allow for non-EU use, but do not pass this saving on directly to consumers

The consultation seeks comments on the draft statutory instrument and explanatory memorandum to remove B2C telecommunications from the use and enjoyment provisions.

The change in VAT treatment will impact any UK businesses supplying telecommunication services to non-business persons travelling outside the EU.

Comments should be submitted to HMRC by 19 May 2017.

Further details on the consultation and draft legislation are available here.