Oil Rig and Platforms - VAT and Flat Rate Scheme

Oil rigs and fixed platforms which are more than 12 miles off the UK coast line are deemed to be outside of the UK for VAT purposes. The default rule for services is the place of supply is where the customer is based. Often oil rigs and platforms are owned by UK entities so logic would dictate that UK VAT is charged on contractor services, however, fixed platforms and oil rigs are deemed to be land related supplies and the place of supply rule for land dictates it is where the land is. As the land is deemed not to be the UK, such services are treated as being outside the scope of VAT. Outside the scope of VAT means you can register for VAT, reclaim input tax (subject to usual partial exemption rules if applicable) but there is no output tax to declare. Contractors working on rigs may also be using the Flat Rate Scheme. Usually you would include all your turnover in the Flat Rate calculation, including zero rated and exempt supplies, but many make the mistake of including outside the scope of VAT turnover too. But Outside the scope of VAT turnover is, well, outside the scope of VAT! So if you are a contractor, supplying services to fixed platform or rigs beyond the UK coastline, then you could register for VAT to reclaim input tax without a need to declare output tax OR if you are already VAT registered, check to make sure you have declared output tax correctly. https://www.gov.uk/hmrc-internal-manuals/vat-place-of-supply-services/vatposs07300 Don't leave this to chance, speak to your advisors or speak to us if you want to know more.