Service provided in the UK, to a customer based in Ireland - should VAT be charged?

Hi there, we have the following scenario - We are a UK entity with a sister company based in Ireland. The Irish company is purchasing a service from a third party UK entity. The place of supply is in the UK. The third party is wanting to charge 20% VAT to our Ireland entity, but the Irish entity is not UK VAT registered, and therefore could not recover the VAT. Can we ask the UK third party supplier to invoice us (UK entity) so that we can recover the VAT? We would then want to cross-charge the service provided, on to our sister entity in Ireland - but would we still have to charge VAT at this stage?....in which case we'd be back to square one! Can anyone please advise how best to resolve? Thanks.

Place of supply of services is normally based where the customer is (Ireland/reverse charge), except where the "use & enjoyment" rules are in play, in that scenario, the place of supply is where the services are used & enjoyed and you are stating the services are used & enjoyed in UK and so the supplier is correct, the supplier has to charge UK VAT. HMRC Notice 741A, section 13. https://www.gov.uk/guidance/vat-place-of-supply-of-services-notice-741a#sec13 The supplier could invoice the UK business, but when the UK business recharges this back to Ireland then you are still caught by the same rules, the UK company is making a supply to Ireland of services but those services are clearly used & enjoyed only in the UK, so UK VAT would still apply. Recharges are probably not the best way to go, can't the UK entity just incur the costs of this service on it's own, unless that interferes with any kind of cost+ tax planning you have in place.

Hi Jay, thank you for the above response. I should have said initially that although the service is being provided in the UK (it is modifications to a product), the product, and therefore the result of those modifications, are then being shipped to our sister company in Ireland. Does this mean that the "use & enjoyment" therefore reverts back to Ireland, and that the t/p supplier doesn't need to charge VAT? To add some more context - our IRL entity is shipping its product to the UK supplier, the supplier then performs the modifications, and ships the product back to IRL. Given this context, does the outcome change at all? Thanks