HMRC has published new guidance on the VAT treatment of transactions of specified supplies of finance and insurance services following changes made to the principal ‘Specified Supplies’ Order (SI 1999/3121 – the SSO) which extend the right to deduct input tax in relation to EU customers. The changes were made by the VAT (Miscellaneous Amendments, Northern Ireland Protocol and Savings and Transitional Provisions) (EU Exit) Regulations, SI 2020/1545, and took effect following the end of the Brexit transition period.
Businesses affected are those supplying certain financial services from the UK to persons belonging in the EU. This includes banks, investment managers, insurers and brokers.
Financial services (including insurance) are generally exempt from VAT which means that no VAT is charged by businesses supplying financial services and VAT on the costs relating to those supplies cannot be deducted as input tax. The SSO allows businesses which export certain financial services, known as specified supplies, to deduct input tax on costs associated with making those supplies (exemption with right to deduction).
The SSO previously provided a right to deduct input tax in relation to specified supplies made to customers belonging outside the EU. With effect from IP completion day (11pm on 31 December 2020) the order was extended to include specified supplies made to customers belonging in the EU.
HMRC has published new guidance on the VAT treatment of transactions of specified supplies of finance and insurance services following changes made to the principal ‘Specified Supplies’ Order (SI 1999/3121 – the SSO) which extend the right to deduct input tax in relation to EU customers. The changes were made by the VAT (Miscellaneous Amendments, Northern Ireland Protocol and Savings and Transitional Provisions) (EU Exit) Regulations, SI 2020/1545, and took effect following the end of the Brexit transition period.
Businesses affected are those supplying certain financial services from the UK to persons belonging in the EU. This includes banks, investment managers, insurers and brokers.
Financial services (including insurance) are generally exempt from VAT which means that no VAT is charged by businesses supplying financial services and VAT on the costs relating to those supplies cannot be deducted as input tax. The SSO allows businesses which export certain financial services, known as specified supplies, to deduct input tax on costs associated with making those supplies (exemption with right to deduction).
The SSO previously provided a right to deduct input tax in relation to specified supplies made to customers belonging outside the EU. With effect from IP completion day (11pm on 31 December 2020) the order was extended to include specified supplies made to customers belonging in the EU.
