Exports - UK

Exports - UK

Isle of Man

Treated as a sale within the UK and not an export.

Channel Islands

Part of EU for customs but outside for VAT. Sales to Channel Islands are exports for VAT purposes.

Gibraltar

Sales to Gibraltar are exports.

Conditions for Zero-rating an export (Notice 703 3.3)

1. Goods are exported out of UK within specific time frame (typically 3 months)

2. Obtain and keep valid commercial or official evidence within the same time frame.

3. Keep satisfactory evidence commercial or official evidence of the export transaction.

4. Comply with the conditions set out in Notice 703.

5. Direct exports - must not deliver within the UK or allow goods to be collected on behalf.

6. Indirect - must not supply goods to private individual in UK or a business with a FE/BE in the UK.

Direct exports

Supplier sends the goods to the destination and is responsible for organising transport.

Indirect Exports

The customer or their agent collects / arranges collection of the goods from the overseas supplier.

This is still an export

UK Supplier sends goods outside of UK but invoices a UK branch (follow the goods).

Deposits

Deposits are advanced payments and have the same VAT liability as the final supply (ZR assuming export).

Evidence - difficulties in obtaining

Indirect - Obtaining evidence from customer may be harder, so consider baking in conditions to contact:

1. Payment for VAT at risk (to be returned after)

2. Must provide evidence in a set amount of time etc.

3. Customer is liable for any VAT due.

Failure to meet ZR conditions

Goods liable to forfeiture - VAT that would have been due is payable by the buyer or any other person in possession of the goods.

Agency - ultimate liability

Lies with the supplier / customer for the VAT chargeable

Agent obligations

The freight forwarder, shipping company, airline or other person appointed by you, the exporter, or your overseas person should:

• take reasonable steps to make sure that the goods are as described by the exporter

• make sure that the necessary pre- or post-shipment customs formalities are completed

• make sure that the goods are exported within the time limits specified by the exporter

• keep records of each export transaction

• obtain or provide valid evidence of export (read sections 6 and 7) and send it to the exporter once the goods have been exported

Agents - when to appoint

A supplier or customer (indirect export) can appoint an agent / freight forwarder to do the export and handle declarations on their behalf.

Exporting goods AFTER consolidation, processing or incorporation

Specific situation with conditions, see S3.5 in Notice 703.

Multiple transactions in a single movement (i.e sale from (A) UK to (B) UK to (C) Non-UK where goods move from A to C)

On the final transaction can be ZR (p4.1)

Retail Export Scheme - What is it

Applies to NI only, allows overseas customers to receive a refund on VAT paid on goods being exported to destinations outside of NI. Notice 4407.

Voluntary scheme - don’t have to apply it. Can apply to certain lines / require a min value to operate the scheme.

Retail Export Scheme - Process

RES retailers must account for the VAT on the supply to the overseas visitor at the time of the supply. Only once notification of the endorsement of the VAT 407 and evidence of destination is received by them and the refund made can the VAT on the supply be adjusted.

And only after this can the refund to the customer be processed in the agreed way at the time of sale.

So customer does pay the VAT first then reclaims the refund via a stamped VAT 407.

Retail Export Scheme - NI to UK movements

Direct - NI to GB (or via the EU, Ireland etc), stamp 407 when leaving NI/EU.

Indirect - NI to GB via a non-EU country (Switzerland etc), stamp 407 when leaving NI

Retail Export Scheme - Direct movements to UK - VAT accounting

After receiving stamped 407, supplier must account for UK import VAT before the refund. So net effect is nil. Suppliers may not offer RES to GB customers.

Exports - Motor Vehicles (Direct)

Can be ZR export (new or second hand) assuming conditions for ZR are met. Consider if personal export scheme applies for ZR too.

Exports - Motor Vehicles (Indirect)

Can be ZR provided:

1. Supplier keeps supplementary evidence of export

2. Vehicle is exported within 3 months of the supply.

3. Obtains proof of export within 3 months of the supply.

Consider if PES applies.

Personal Export Scheme

Allows new and second hard motor vehicles to be purchased free of VAT provided certain conditions are met (not including pedal cycles and trailer caravans).

Only applies to sellers who have signed / registered for PES. See notice 707 or more.

Advisable to check with embassy’s that you can import cars in to the country (some countries you cannot).

Personal Export Scheme - Delayed recovery

If you pay VAT on a car which later turns out to have qualified, you cannot get a refund,

Sailaway Boats - Direct exports

Can ZR if conditions met for DIRECT export.

Exports where there is no taxable supply - no need to account for VAT

1. Export of goods for supply and install

2. Temporary export for exhibition or processing

3. Export of goods on sale or return (ownership remains with supplier)

4. Transfer of own goods outside the UK.

You must still hold valid proof of export and declare any goods returned to the UK.

p2.12, 2.13 (Notice 703)

Proof of export - general principles

Equal weight put on official and commercial evidence, but both should be supported by supplementary evidence (6.2). Obtain and retain for 6 years.

For indirect exports - standard of evidence is high (6.6)/

Proof of export - lost of mislaid

Duplicates are allowed but this must clearly be marked as ‘duplicate evidence of export’

Proof of export - photocopies

Photocopy certificates of shipment are not normally acceptable as evidence of export (unless authenticated by shipping / airline).

IOSS - General

EU system implemented that allows a GB trader to use a monthly return to account for VAT on low consignement goods and OMP sales of goods to private customers in all member states. There is VAT and duty exemption at import.

If OMP, the trader doesn’t register, OMP is the deemed supplier (recall <£135 / EUR 150).

GB Co may need to appoint an intermediary in EU MS to deal with IOSS registration and compliance obligations.

IOSS - Compliance

Return is due end of the month following the period it relates. Will record total value of goods sold, total VAT payable and rates for each MS.

IOSS - Records

Keep for 10 years.