VATPOSS15100 - Use and enjoyment: Introduction
The ‘use and enjoyment’ rules apply to the following supplies:
B2B supplies of
- telecommunication services
- electronically supplied services
- insurance repair services
B2B and B2C supplies of
- hiring of goods
- hiring of means of transport
- broadcasting services
Effective use and enjoyment take place where a recipient actually consumes services irrespective of the contractual arrangements, payment or beneficial interest. These rules prevent distortive outcomes that would happen if we only considered the location of the supplier and customer when deciding which country's VAT rules apply to a service (see VAT Notice 741A). (See VAT Notice 741A). It would be distortive, for example, for supplies, such as telecommunications services, that are consumed outside the UK to be subject to UK VAT. Equally, it would be distortive for there to be no UK VAT on such services when they are consumed in the UK.
The use and enjoyment rules ensure that the place of supply is:
- in the UK, where the customer actually consumes the services in the UK, and the place of supply would otherwise be outside the UK; and
- outside the UK where the customer actually consumes the services outside the UK, and the place of supply would otherwise be in the UK.
For example, a UK business supplies telecommunications services to a business belonging in France. Normally the place of supply would be where the business customer belongs, which would be France in this example. However, if the French business customer uses and enjoys those services in the UK, then the place of supply of the services shifts to the UK under the use and enjoyment rules. If the services are only partly used and enjoyed in the UK, then only that portion of the supply would take place in the UK and be subject to UK VAT.