Determining whether a sale is subject to VAT

KEY POINTS

• The source of payment is not always relevant when determining VAT liability.
• Care must be taken when dealing with the place of supply rules.
• The Redwood Birkhill case illustrates the difficulties that can arise when identifying the nature of a supply of goods or services.
• Has there been a supply for VAT purposes?
• If there is doubt about the identity of the supplier customer perception is a key consideration.

There are times when we are faced with a VAT problem and need to ignore where the money is coming from to decide whether a sale is subject to VAT. To give an easy example if a UK business receives an order from Aunty Mary in New York to deliver a computer to her nephew Steve in Newcastle this...