The European Policy Committee has changed its instructions on the classification of exhibition stands.
Exhibition stands can now be classified as exhibition services, where they are supplied together with other accompanying services rather than the previous land-related supply classification.
This is an important distinction that will allow UK exhibition organisers to reverse charge non-UK EU exhibitors and will put exhibitors in the rest of the world out of scope.
Karim Halwagi, chief executive of the AEO said: "I am delighted with this fantastic news, which represents a big win for our industry. The changes follow ongoing discussions between the AEO and HMRC and I am thrilled to learn that HMRC have adopted and published these changes for the benefit of the UK exhibition industry."
The changes mean the following applies:
Stand space at exhibitions and conferences
- Currently HMRC regards the supply of specific stand space at an exhibition or conference as a supply of land. This policy will continue where the service is restricted to the mere supply of space without any accompanying services.
- However, where stand space is provided with accompanying services as a package, this package (stand and services) will no longer be seen as a supply of land with land related services but will be taxed under the general place of supply rule (customer location) when supplied to business customers.
- Accompanying services provided as part of a package includes such things as the design and erection of a temporary stand, security, power, telecommunications, hire of machinery or publicity material.
Changes of HMRC policy
- Where businesses have been treating services in accordance with HMRC’s earlier policy, they may continue to apply that treatment for a transitional period of up to three months from the date of this brief to make adjustments to their systems and processes. However, businesses that wish to adopt the new treatment may do so immediately if they wish.
Although businesses may make adjustments for past periods, any VAT declared in accordance with HMRC’s earlier policy, that would not have been due under the new interpretation, will not be entitled to a refund unless:
- It can be demonstrated that the customer has not recovered the VAT charge and any VAT repaid by HMRC will be refunded to the customer
If that is not the case then HMRC will consider the defence of unjust enrichment in deciding whether to make a repayment of the VAT declared.
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