A: As per para 3.2 of Notice 744B freight transport comes under the general POS rule (Notice 741A para 6.3) of where the customer belongs. There is however an exception to this where the B2B POS switches to where the transport takes place. From 1 January 2021 this exception applies where the customer is in the UK but the freight transport takes place wholly outside the UK; before 2021 it only applied where the transport took place wholly outside the EU.
For this client therefore, in 2020 this service would have been subject to UK VAT (POS where the customer belongs), but from 1 January 2021, it will be outside the scope of UK VAT (POS where the transport takes place).
EU rules will also need to be checked to see whether the UK supplier (or potentially the UK customer if it has an EU establishment as well) has any EU VAT obligations (e.g. potential VAT registration liability in Portugal, France and (potentially, depending on the route taken) Spain.
These publications from Markel Tax were correct at the time of going to press and should be considered as principles-based guidance only. To check current validity, call the Markel Tax helpline. ICAEW (as distributor) disclaims all liability for any errors or omissions.
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