Comprehensive Guide to VAT on Services: Rates, Rules, and Compliance Essentials

• VAT applies to most services provided by VAT-registered businesses in the UK
• Services are intangible activities performed for customers
• VAT must be charged if the business is VAT-registered, services are supplied in business, services are not VAT-exempt, and UK VAT applies
• Standard rate VAT is 20 percent for most services
• Reduced rate VAT is 5 percent for specific services like domestic fuel and energy-saving materials
• Zero rate VAT applies to exported services, international transport, and certain EU supplies
• Exempt services include banking, insurance, medical care, education, postal services, betting, and burial services
• VAT is due on the earliest of invoice date, payment receipt, or service completion
• Business-to-business services are taxed where the customer is located
• Business-to-consumer services are taxed where the supplier is established
• Service invoices must include specific details like supplier and customer information, invoice number, and VAT details
• Mixed supplies require determining if they are single or multiple supplies for VAT
• Disbursements may avoid VAT if conditions are met
• International services need careful analysis for place of supply and reverse charge procedures
• Common compliance issues include incorrect VAT rates, place of supply errors, and inadequate invoice documentation

Source: deeksvat.co.uk

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

---

---