PERIODONTITIS APICAL AGUDA

25. Meaning of supply of services

Summary

This section defines the meaning of supply of services. For VAT purposes, a service is any commercial activity that is not a supply of goods. Services also include refraining from doing something and the granting or surrendering of a right.

(Also see the two-thirds rule in section 41: A transaction that appears to be a supply of services may be taxed as a supply of goods. This applies where the VAT-exclusive cost of the goods to the supplier exceeds two- thirds of the VAT-exclusive price charged to the customer.)

Details

Subsection (1) defines services in very wide terms and provides, in effect,

that any business activity that is not a supply of goods is a supply of services. It includes the performance or omission of any act or the toleration of a situation. The definition, therefore, includes such activities as the hiring and repairing of goods, the granting of patent or copyright licences, the promotion of competitions and entertainment including dances, the transport of goods, advertising and the discharge of an undertaking to refrain from any activity, or the toleration of any situation.

(1)

The supply of ready-to-consume food or drink is treated as a supply of services and not a supply of goods where it is supplied-

 by a vending machine,

 on the premises of a catering or similar business, or

 on the premises or site of any other business where facilities are provided to consume the food or drink supplied. This includes on- site catering for films and the like, where there is no fixed premises.

(2)

26. Transfer of intangible business assets deemed not to be supply of services

Summary

This section provides that the transfer by an accountable person to another accountable person or a flat-rate farmer of the goodwill or other intangible assets of a business, in connection with the transfer of a business, is not a supply of services. This also applies to the transfer of such assets by a person who is not an accountable person to another person. This provision matches the relief provided for in section 20(2)(c) in relation to goods.

For the purposes of the section, accountable person does not include a person who is accountable only by virtue of the making of intra- Community acquisitions or received services from abroad.

(1)

The transfer of the goodwill or other intangible assets of a business, in connection with the transfer of a business, is not a supply of services. The effect of the provision is that if any consideration is paid by a purchaser of a business in connection with the transfer, e.g. a payment for the goodwill of the business, the transaction will not be regarded as a supply of services for VAT purposes, and so will not be taxable.

PART 3 – TAXABLE TRANSACTIONS

27. Self-supply of services

Summary

This section makes provision for the charging of “self-supplies of services” in accordance with regulations. There are regulations covering the private use of business assets and for catering services. The section also provides that the private or non-business use of property is a self- supply of services, if VAT deductibility had been claimed in respect of its development or purchase.

Details

Subsection (1) makes provision for the charging of “self-supplies of

services” in accordance with regulations. The Regulations made to date concern the use of business assets for private or non-business purposes and canteens (Regulation 7 and Regulation 8 of the VAT Regulations 2010).

(1)

Other self-supplies of services are not taxable, but the VAT must be accounted for on the goods used. For example, if a painter paints his own house using paint taken from stock, he or she is liable to account for VAT on the paint but not on the value of labour supplied.

Subsection (2) provides, subject to subsection (3), that with effect from 1

July 2008 if VAT deductibility is claimed by a business on the acquisition or development of property, then the private or non-business use of that property during the next 20 years is a taxable supply of services. The taxable amount is based on the amount of VAT charged to the accountable person at the time of the purchase.

(2)

Subsection (3) excludes immovable goods acquired or developed on or

after 1 January 2011 from the provision in subsection (2).

(3)

Example:

o Cost of property: €1million, made up of €881,058 plus €118,942 VAT @ 13.5%

o Property used 80% for business and 20% for residential purposes o VAT deductibility of €118,942 claimed (i.e. full amount).

o Amount on which VAT is chargeable for each taxable period is: €881,058 x 20% = €176,211 (private proportion) x 1/20 = €8,810 (annual amount) x 1/6 =€1,468 (per taxable period).

28. Special rules in relation to supplies of services

Summary

This section contains technical provisions in relation to supplies of services. The first two subsections are designed to ensure that services supplied by undisclosed agents and by persons who are not legally entitled to receive a fee are brought within the VAT net. The third subsection provides that persons registered for VAT will be able to recover the VAT element of legal and professional fees where the services are supplied to the insurance company under an indemnity policy, rather than directly to the taxable business. The fourth and fifth subsections make specific provisions in relation to receivers and liquidators.

Details

Subsection (1), which deals with undisclosed agents, provides that the

supply of services by an agent acting in his or her own name but on behalf of another person is deemed to be a supply to and simultaneously by that agent.

(1)

Subsection (2) deals with the supply of services by barristers. When a

barrister supplies a service he or she is not legally entitled to receive a fee in respect of that supply even though appropriate steps may be taken at the time to secure payment. Accordingly, no part of the fee charged to the client may be regarded as consideration which the barrister “becomes entitled to receive” in accordance with section 37(1) and no liability to tax arises by virtue only of the supply of the service.

This subsection provides that the barrister's service is deemed to take place when the consideration is paid. Therefore, a barrister will have no liability to tax until he/she has supplied a service and has been paid in respect of the supply. Also, the obligation to issue an invoice under

Chapter 2 of Part 9 does not arise until the two conditions (supply and

payment) have been fulfilled. In effect the barrister operates a form of moneys received basis – see section 80.

(2)

Subsection (3) provides that, for VAT purposes, the services of a barrister

or solicitor supplied for a firm of insurers are deemed to be supplied to the holder of the policy of insurance where the holder is indemnified under the policy in respect of the costs of such services. Consequently, a policy holder who is a taxable person for VAT purposes can recover VAT charged on solicitors’ and barristers’ services which relate to his or her taxable supplies.

PART 3 – TAXABLE TRANSACTIONS

Subsection (4) provides that where a receiver/liquidator supplies a

service/letting in the course of carrying on the business of an accountable person, or in the course of winding up a company, then the accountable person is deemed to have supplied the service/letting.

(4)

Subsection (5) deals with a situation where a receiver takes control of a

property and the receiver opts to tax a new letting of that property. Where the owner of the property was not an accountable person (i.e. had been engaged in exempt letting) the supply is deemed to be made by, and the option to tax deemed to have been exercised by, the owner.

PART 4 – PLACE OF TAXABLE TRANSACTIONS