When you export goods to a country outside the EU the goods are 'zero-rated' for VAT purposes, which means you do not apply VAT to the value of the goods. However, you need to have the paperwork to prove that the goods left the UK.
If your customer does the physical exporting, in that they take
possession of the goods in the UK and handle the shipping, this is
called an 'indirect export'. HMRC has previously only allowed you to
zero rate the goods in this situation if your customer was an 'overseas
person' - they had no VAT registration in the UK and no business
establishment here. Also the goods must leave the UK within three months
of the handover date.
From 1 October 2013 the rules for indirect exports
have been relaxed slightly. Now you can zero rate the goods for export
to a country outside the EU even if your customer is VAT registered in the UK. However, the customer must still not have a business established in the UK.
This change in the rules has been brought about due to pressure on
the UK to comply with EU rules. It is thus effectively back-dated for
four years. If you believe you have applied VAT in the last four years
when under this change of rule it would not apply, you can reclaim that
However, HMRC will expect you to pay back any reclaimed VAT to your
customers who original bore the VAT on the goods.
We can help you check that you have the VAT position on any exports 100% correct.
#vat #exports #zerorated