No VAT charges by a carrier

I work for a warehousing business and we use carriers to despatch our clients goods to their end consumers. We have just taken on a new carrier where the legal entity billing us is based in Europe. They have charged no VAT which is the first time we have not been charged VAT from a carrier, though all the other carriers are UK entities. They are a global business so I can only assume that this is correct. Currently we are using this carrier for one specific client whom we don't charge VAT as they are a foreign entity and the place of supply is where the customer belongs. If we use this carrier for one of our UK clients and there is no VAT charged should we be charging our client VAT on their despatch charges?

To provide an update to this the legal entity billing us is based in Luxembourg. Does this have an impact?

Hi,

If you are arranging a freight service in the UK to a business customer who belongs in the UK then you would need to charge VAT on this supply.

This would still be the case even if your freight agent has not charged VAT on the supply to you.

Thank you.
 

Hi,

You may want to confirm with the courier that the VAT not being charged by them is correct.

However, under the place of supply rules, if a UK courier were to charge for a freight service to a business customer based overseas, then this would be outside the scope of UK VAT and would be subject to the reverse charge by the business customer if they are based in the EU.

Therefore it is likely that the EU courier has deemed the place of supply to be in the UK, as that is where their business customer is based and so would be subject to the reverse charge by your company.

Place of supply of services (VAT Notice 741A)

Thank you.