Last year I paid for a year's subscription to a well-known 'internet security' software product and later realised that I had been charged about £9 for UK VAT that had been included in the price. The supplier company is based in the UK, but I am resident in Jersey, Channel Islands, an area which is outside the scope of VAT (although a domestic 5% sales tax is levied on goods and services over a certain value). I should add that I was using the software for purely domestic and not business purposes. When the time came to renew my subscription, I queried whether the company had the right to charge me the VAT. The e-mail reply that I received stated that the price of the internet security subscription was "the same with or without VAT, we can include the VAT percentage in the invoice for companies that use it to deduct from local taxes. In your case for the Channel Islands, the price is in full with 0% VAT." Consequently I declined to renew my subscription, not only because of the VAT issue, but because I thought they were overcharging for their product anyway. I have since come across the EU rules on 'Electronically Supplied Services' that came into force in 2003. On the face of it, 'downloaded software (including updates of software)' clearly seems to be covered by this definition. However, having read the information sheet provided by HM Revenue & Customs, I am still not sure whether or not a UK company supplying software to a Channel Islands non-business customer is obliged to add UK VAT and am therefore hoping that CAG members might be able to enlighten me a bit further. I am sorry but I am being prevented by petty board rules from including the appropriate link to the 11-page HM R&C information sheet with this message, but below I have quoted some extracts. There seems to be a contradiction in the HM R&C rules. On the one hand, they state that the use and enjoyment provisions do not apply where (amongst other things) "the supply is to a private individual or non-business organisation..." (page 6 of 11). This would appear to mean that I would indeed be liable to pay UK VAT even though I am using and enjoying the product outside of the EU. On the other hand, it states at the top of page 2 that "if you are a UK supplier of these services, you will no longer be required to account for VAT on supplies to: businesses in other Member States or non-EU customers (except, in certain circumstances, where they are used and enjoyed in the UK)." Note that it doesn't specify that the non-EU customers have to be business ones. This sounds more promising. Furthermore, it states the following at the top of page 4: "The place of supply is where the customer belongs when electronically supplied services are received by: any customer who belongs outside the EU or a customer who belongs in a Member State, but in a different country (EU or non-EU) to the supplier, and who receives the supply for business purposes or a private individual or non-business organisation who belongs in a Member State, when supplied by a non-EU business." It goes on to add that "supplies by UK providers to customers in the first two categories above are not subject to UK VAT because they are outside its scope." Therefore I take the above to mean that even if I don't qualify under the use and enjoyment provisions, I should still be exempt from paying UK VAT for my internet security under the place of supply provisions, because I am a customer who belongs outside the EU. What does everyone else think?