AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
For services sold to private individuals, the general UK VAT rule is that the place of supply is where the supplier belongs, so a VAT-registered UK freelancer normally charges UK VAT even when the customer lives in Nigeria. The main exception is a list of services in Schedule 4A, paragraph 16 of the VAT Act 1994, including consultancy, accountancy and legal services, hiring out goods and supplying staff: when supplied to a consumer outside the UK, no UK VAT is charged. If you are not VAT registered, you charge no UK VAT either way.
Start with one question: are you VAT registered?
Everything in this article applies only to VAT-registered businesses. GOV.UK says you must register when your VAT taxable turnover over the last 12 months goes above £90,000, or you expect it to within the next 30 days. If you are below that and have not registered voluntarily, you do not charge UK VAT to anyone, in the UK or Nigeria. Sales to Nigerian consumers that do carry UK VAT do count towards that threshold; sales that are outside the scope do not.
The general rule for consumers
ACCA's guidance on services to customers outside the UK (modified February 2024) sets out the default: for business-to-consumer (B2C) supplies, the place of supply is where the supplier belongs. A UK-based supplier is therefore making a UK supply, and charges UK VAT at the normal rate if the service is standard-rated. That surprises many freelancers, who assume "export" means no VAT. For services to businesses abroad that is usually right; for services to individuals it is not, unless an exception applies.
The paragraph 16 exception
From 1 January 2021, ACCA explains, Schedule 4A paragraph 16 covers services supplied to any consumer outside the UK, in the EU or elsewhere. For those services no UK VAT is charged. The services described include, among others:
- services of consultants, and consultancy;
- accountancy and legal services;
- hiring out goods (other than means of transport);
- supplying staff.
The full list is in HMRC's VAT Notice 741A. ACCA stresses a limit on the consultancy heading: the service must consist of providing information and expert advice. Services that fall short of that, or go beyond it, fall back to the general B2C rule and may attract UK VAT. ACCA cites the tribunal case Mandarin Consulting Ltd v HMRC [2020] TC07714, where career coaching was held to be consultancy.
How that plays out for common services
| Service to an individual in Nigeria | Likely position (check Notice 741A) |
|---|---|
| Expert advice: immigration, tax, career or business consultancy | Paragraph 16: no UK VAT |
| Legal or accountancy work for a private client | Paragraph 16: no UK VAT |
| One-to-one coaching that is mainly advice | May be consultancy (Mandarin Consulting) |
| Designing a personal wedding website, editing photos | General B2C rule: UK VAT if registered |
| Live online tuition | Check Notice 741A; not covered by the ACCA note |
| Pre-recorded courses, downloads, apps | Separate rules for digital services; see below |
Digital and automated services
Selling e-books, recorded courses, templates or app subscriptions to people in Nigeria raises different rules from personal services, and the ACCA note does not deal with them. They are covered in UK VAT on digital products sold to Nigerian buyers. On the Nigerian side, 7.5% Nigerian VAT may apply to digital services consumed in Nigeria; see Nigerian VAT on digital services.
A worked example
Example only, assuming the standard rate of 20% applies; check the current rate on GOV.UK. Tolu is VAT registered and sells two services to individuals in Abuja:
| Service | Price before VAT | UK VAT | Customer pays |
|---|---|---|---|
| Immigration consultancy session (advice) | £200 | £0 (paragraph 16) | £200 |
| Logo and wedding invitation design | £300 | £60 (20% of £300) | £360 |
The design work follows the general B2C rule, so Tolu charges UK VAT on it even though the customer is abroad. The consultancy is outside the scope of UK VAT. Tolu keeps evidence of where each customer lives, such as a Nigerian address and phone number and the payment source.
Evidence and records
- Customer location: a Nigerian address, phone number and, where possible, the country the payment came from.
- Consumer or business: if the customer gives business details (CAC number, company name), the business-to-business rule may apply instead; see charging VAT to a Nigerian business.
- What the service is: a clear description on the invoice helps support a paragraph 16 treatment.
Mixed customers and changing facts
Freelancers with Nigerian customers often have a mix: a diaspora individual in Lagos one month, a small Abuja company the next, and a relative-of-a-friend who wants the invoice in a business name the month after. Decide the treatment invoice by invoice, based on who the customer actually is and what you are supplying, not on a single label for "Nigerian work". If a regular customer moves to the UK, or starts buying through a UK company, the answer can change from one invoice to the next. A short note in your records of why you treated each sale as you did makes a later VAT check far easier, and helps your accountant at the quarter end.
Where Pryme fits
With Pryme's Invoicing you can show VAT, or the reason for no VAT, on each invoice, and the Finance agent can split sales by customer type and location to help you and your accountant check the treatment; a person approves before anything is filed.
Questions people ask
Do I charge UK VAT to an individual in Nigeria?
If you are VAT registered, the general rule says yes, because the place of supply for consumer services is where the supplier belongs. Services listed in Schedule 4A paragraph 16, such as consultancy, accountancy and legal services, are an exception: no UK VAT when supplied to a consumer outside the UK.
Is coaching outside the scope of UK VAT?
Only if it counts as consultancy, meaning providing information and expert advice. ACCA cites Mandarin Consulting, where career coaching was held to be consultancy; other coaching may not be.
Do I charge VAT if I'm not VAT registered?
No. You charge UK VAT only if you are registered; registration is required above £90,000 of taxable turnover in a rolling 12 months.
Do consumer sales to Nigeria count towards the VAT threshold?
Sales that carry UK VAT count; sales that are outside the scope, such as paragraph 16 services to consumers abroad, do not.
Sources
- ACCA In Practice: VAT on supply of services to customers outside the UK (Sept 2022, modified 23 Feb 2024) · accessed Oct 2026
- GOV.UK: VAT registration, when to register (checked Oct 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.