My company is quite new to exporting and although we know we don’t charge VAT on goods we sell to countries outside the UK we need to know a bit more about it? Also would it be different if we sell within the EU?
VAT is a tax charged on goods used in the UK, so if goods are exported outside the UK, VAT isn’t charged.
You can issue an invoice excluding VAT if the sale is made to a country outside the EU.
You must make sure the goods are exported from the UK/EU and obtain evidence of export and/or a proof of delivery, within three months from the time of sale.
The three months is set from either the day:
- goods are sent to the customer
- full payment for the goods is received - whichever is earlier.
You do not have to charge VAT on sales to EU customers as long as they provide you with a valid VAT registration number, but you must also keep evidence of the “export” to show the goods have left the UK.
You can check to see if an EU VAT number is valid on the Europa Tax Database called VAT Information Exchange System (VIES). If it gives you a valid VAT registration number then quote it on your invoice and declare the sale to HMRC on an EC Sales List which must be completed monthly.
In some situations, your customer in another EU country may not be VAT registered. If this happens then you must charge VAT at the UK rate. This is because VAT is “sent forward” for reporting and calculation to the customer’s VAT account, and if they don’t have one you can’t do this.
Also, do not zero-rate sales if your customer asks for them to be delivered to a UK address. If the customer arranges to collect them from you, for example if it is an Ex Works export, you may be able to zero-rate the sale but you must have the evidence of export/overseas shipment which may be difficult to obtain if you are not controlling the transport.
If you cannot obtain the evidence of shipment then charge VAT.
For more Customs advice visit www.essexchambers.co.uk