As outlined during the UK’s recent budget, HMRC are currently holding a consultation for comments on their plan to remove the use and enjoyment provisions that currently apply to telecommunication services for private consumers.
At the moment, if a UK consumer uses or enjoys a telecommunication service outside of the EU then that supply is not subject to UK VAT. This is because the “use and enjoyment” rules deem the supply to be outside the scope of UK VAT. Under the UK’s proposed new legislation though from 1 August 2017, that supply will become subject to UK VAT.
The proposed new laws will result in an increased VAT cost for consumers compared to the past position. However, the new rules will bring the UK into line with the international approach agreed at the Organisation for Economic Co-operation and Development and also mirror the rules applied by many of the other EU Member States.