Charging VAT when my customer is in the UK, but the construction project or oil rig is outside the UK?

As a UK business providing services to a UK customer, you normally charge VAT at the Standard Rate 20% when invoicing your customer.

On the other hand, when your customer is outside the UK you usually do not add VAT to your customer invoice and instead use the code No VAT as it is typically considered to be ‘Out of Scope’.

These commonly used rules do not apply when the service involves land or the extraction of natural resources, where the place of supply of VAT is determine by the location of the land/oil rig itself.

This means that if your customer is based in the UK but the location of the land, construction project, or oil rig is not in the UK, then you would not charge VAT to your UK customer.

Services that are generally considered to be in relation to land are:

• building services
• painter & decorators
• oil rig contractors

Note – for an oil rig to be considered to be in the United Kingdom for VAT purposes, it needs to be within 12 nautical miles of the UK shore.

For expert advice, please get in contact.