If your business is involved in an international supply chain, it is likely you will be faced with a whole raft of additional VAT issues. The very nature of trade and VAT is extremely complicated, so speaking to a professional about your specific business needs is recommended.
At The VAT People, our team has years of experience in helping businesses to navigate the difficult world of VAT, and we are dedicated to helping our clients both save money and avoid penalty by ensuring they are paying the right amount.
Sales to overseas companies
If your business sells, supplies or transfers goods out of the UK to someone in another country, it is likely you will need to charge VAT on them. While you can generally zero-rate those supplies that are exported outside of the EU, and those sent to someone who is registered for VAT in another country, this can be a complicated process.
Those businesses selling goods or services to someone in another EU country that is not VAT-registered should still charge VAT in the normal way.
Sales to other countries inside the EU are referred to as ‘dispatches’ or ‘removals’, while ‘exports’ describes sales to a country outside the EU.
Sales to VAT-registered parties
If you are sending goods to someone who is registered for VAT in the European Union (but not in the UK), it is possible to zero-rate the supply for VAT purposes in the following circumstances:
If the goods are sent out of the UK to another EU country
If you have access to the VAT registration number of the customer, including the two letter country code, and show it on your sales invoice
If you have evidence of removal, which proves the goods have been exported from the UK
- If you dispatch the goods and get evidence of the removal within a three-month period
To account for the VAT on zero-rated sales to another EU country, include the value of the goods and services in your next VAT return.
Evidence of removal will include a number of things, such as:
Proof of correspondence with customers
Invoices from hauliers
- Consignment notes, which show the goods have been received in another EU country
It must show:
Your business details
Details of the customer
A detailed description of the goods and their value
The method of transport and route
- Where the goods are travelling to
You must keep evidence of removal for six years, as HMRC can ask to see this at any time. If HMRC deems this evidence to be unsatisfactory, your business may be asked to pay VAT on the goods or services sold. If you cannot provide this evidence, you must account for VAT on your return.
If you supply goods to private individuals or non-VAT registered businesses located in other member states of the EU then you will need to be aware of the distance sales rules that require you to register for VAT in other member states of the EU in the event that sales to that country exceed a defined threshold.
VAT on exports to non-EU countries
VAT is not charged on goods that have been exported outside of the EU, which means businesses can zero-rate the sale of items to people in these countries. However, you must keep evidence of the export, and be sure to comply with all other laws.
It is also necessary to ensure the goods are exported within three months from the time of sale, and you must seek evidence of this. The three-month period can be longer for those items that need processing before export.
The time of sale is classed as whichever of the following came first:
The date the goods are sent to the customer
- The date you receive full payment for them
How we can help
At The VAT People, we have years of experience in dealing with clients in a variety of circumstances, and we can offer bespoke guidance to ensure your VAT affairs are in order.
If you are unsure of whether you should be paying VAT, or if you have done so wrongly and need to claim it back, we can help. Contact us today by calling our helpline on 0161 477 6600, or fill out the online enquiry form on this page and we will be in touch.
Latest Case Studies
Watch Our Videos
Get the vital information you need quickly and easily by watching one of our guidance videos - topics include VAT assessments and penalties, VAT for charities, and maximising VAT recovery.