Students based outside the EU
We have considered whether there is a possibility of treating customers established outside the EU as being outside the scope of UK VAT, rather than subject to UK VAT at the standard rate. However, the types of services that are afforded this treatment are very prescriptive and tuition services do not fall within this category. As a result, tutorials given by PST to non-EU students will be treated in the same way as for students who are resident within the EU, that is to say the standard rated of VAT.
There are many services which, when supplied by a UK established business such as Prep School Tutor Ltd, do not attract VAT when the recipient is based outside the EU. However, there are specific rules relating to education supplies that unfortunately mean these fall within the UK VAT regime.
Where services are received in a non-business capacity, the place of supply rules (which are explained in HMRC Notice 741A) state that these are treated as having a place of supply of the UK unless the type of service being supplied falls within one of the following headings:
- Transfers and assignments of copyright, licences, trademarks and similar rights
- Acceptance of any obligation to refrain from pursuing or exercising any business activity
- Advertising services
- Services of consultants, engineers, consultancy bureaux, lawyers, accountants and other similar services
- Banking, financial and insurance services
- Provision of access to, and transport or transmission through, natural gas and electricity distribution systems
- The supply of staff
- The letting on hire of goods other than means of transport
- Telecommunications services
- Radio and television broadcasting services
- Electronically supplied services
Tutoring provided “live” via the Internet is not within those supplies deemed as electronically supplied and therefore the place of supply of Prep School Tutor’s services is the UK and its services are subject to UK VAT.