Skip to main content

This is a new service – your feedback will help us to improve it.

Posted Fri, 16 Feb 2024 08:56:03 GMT by
Company A provides water sample testing service to Company B, Company A is based in the UK, and Company B in the EU. Company B collects water samples from customer sites in the UK and Eu and sends them to Company A. Company A then takes those water samples and runs them through their testing equipment which is permanently installed in their building and cannot be removed easily. Company A argues that their supply of the service is inextricably and directly linked to equipment permanently installed in their building and therefore categorise it as a land related service and charge company B (which is based in the EU) 20% UK VAT on their service invoice. Should water sample testing fall within land related category or follow the general rule, where the place of supply would be where the business customer belongs, and therefore outside of the scope of UK VAT? Especially as the equipment was not installed specifically for company B, rather this has already been set up so that Company A can provide services to its customers. Also, as water samples are taken from customer sites in the UK, because the water is local to that site/building, does this then fall within the land related category as there is due diligence, assessment being done on the water in that particular site, similar to a survey being carried out on a property for assessment? Many thanks in advance.
Posted Tue, 20 Feb 2024 12:09:14 GMT by HMRC Admin 21
Hi A Taxman,
VAT Manual VWASS5600 states that this supply would be standard rated. There is nothing within VAT Notice 741A which would contradict this . VAT Water and Sewerage Services
Thank you.
Posted Thu, 29 Feb 2024 09:33:32 GMT by VAT
Could you please explain why water sample testing is a standard rated supply based on VWASS5600 as I can't see this type of supply listed? Is the supply land related or does it follow the B2B general rule? Many thanks
Posted Fri, 01 Mar 2024 07:16:59 GMT by HMRC Admin 25
In the guidance quoted it does say that' there is no general relief from VAT on goods and services simply because they are made by water suppliers.'
The supply would therefore be a vatable supply in the UK.
If the service is being supplied to a company based overseas then the Place of Supply Of Services Rules will determine where the supply is deemed to take place and hence whether VAT will be charged or not.
If the supply comes under the General Rule of servivces then the supply would be Outside The Scope of Vat.
If the supply is deemed to be a land related supply then the place of supply would be the UK and hence UK VAT would apply.
Please see the guidance below:
6. The place of supply rules for services
7. Land related services
The supplier would need to look at these 2 sections clearly to determine the correct nature of the supply.
Thank you, 

You must be signed in to post in this forum.