VAT Advice for Import and Export Businesses
Businesses involved in importing and exporting goods require a thorough understanding of their VAT obligations in order to ensure full legal compliance. The experts at The VAT People can provide the advice you need to make sure all of your responsibilities are being met, while maximising your profitability.
We offer a full range of VAT consultancy, support and advice services to help companies involved in international trade to understand which VAT rules apply to them, and to discuss any issues involving customs and excise duties or Authorised Economic Operator (AEO) status.
Our team has decades of experience in this field, and can provide you with straightforward and commercially intuitive guidance on your VAT obligations to help you find the most efficient solution for your requirements.
For more information about the range of VAT advice and support services we provide for importers and exporters, call us today on 0333 3638 012 or fill out an online enquiry form and we will be in touch.
How we can help you
The VAT People can provide proactive advice in determining the correct duty and VAT values for your import and export activities, taking into account the full breadth and complexity of international rules and regulations.
We are happy to arrange a free, no-obligation discussion on any issue regarding customs duty, excise duty or VAT, as well as assisting in the establishment of the most appropriate and beneficial commodity codes.
Additionally, we can talk you through the law regarding AEO accreditation, discuss the potential benefits of securing AEO status and help you decide whether this is the right choice for your business.
You can find out more about the services we provide on the following pages:
- Brexit advice
- General VAT enquiries
- HMRC assessment reviews
- HMRC VAT investigations
- Partial exemption
- Transactional VAT advice
- VAT health checks
- VAT planning
- Deregistering for VAT
- Dispute prevention and resolution
- Reclaiming VAT from overseas
- VAT training
For more specifically tailored advice on our AEO consultancy offering and how we can support import and export businesses on customs issues, please visit our sister brand, The Customs People.
How does customs duty and import VAT work for non-EU imports?
If a business is importing goods from non-EU countries, there are three broad areas of compliance and opportunity to be considered: the commodity codes of goods imported, the valuation of imports, and any facilitation schemes that can be applied.
Importers are legally responsible for proactively determining and assessing the value of their goods and assigning the right commodity code descriptions, which are used to determine duty rates. Getting this right and declaring the information correctly is essential, as errors can lead to underpayment or overpayment of duty and import VAT, leading to a significant impact on profitability.
In addition, HM Customs & Excise has recently introduced stringent civil penalties on improper import declarations, placing an even greater focus on compliance.
At the same time, businesses should also be aware of a number of facilitation schemes that are available for importers and exporters, which can provide cash flow benefits as well as tangible duty and import VAT savings. Getting the right advice will help your company to achieve full compliance with the relevant regulations, while taking full advantage of any benefits available.
How does customs duty and import VAT work for EU imports?
Intra-EU transactions also need to be considered in a proactive manner, with specific VAT and statistical reporting (Intrastat) requirements in place. Failing to meet these responsibilities will create legal compliance issues for your business.
As the UK’s future relationship with the EU continues to evolve following Brexit, it is important to stay abreast of any regulatory changes that occur in order to remain on the right side of the law when it comes to import and export duties.
How do custom duties apply on sales to overseas companies?
If your business sells, supplies or transfers goods out of the UK to a company in another country, it is likely that you will need to charge VAT on them. While you can generally zero-rate supplies exported outside the EU or those sent to buyers registered for VAT in another country, this can be a complicated process.
Businesses selling goods or services to buyers 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. Again, this may change as the UK proceeds with its plans for Brexit.
How does VAT apply to 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 customers 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 point of sale, defined as whichever of the following comes first:
- The date the goods are sent to the customer
- The date you receive full payment for them
You must provide evidence of this date in order to be exempt from VAT. The three-month period can be longer for any items that need to be processed before exporting.
How can I secure a VAT exemption on sales within the EU?
If you are sending goods to someone who is registered for VAT in the EU (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
The value of the goods and services should be included in your next VAT return. Where evidence of removal is required, this needs to include information on the business details of yourself and the customer, as well as a detailed description of the goods and their value, the method of transport and route, and where the goods are travelling to.
This can include:
- Customer orders
- Proof of correspondence with customers
- Sales invoices
- Packing lists
- Invoices from hauliers
- Bank statements
- Consignment notes, which show the goods have been received in another EU country
You must keep evidence of removal for six years, as HMRC can ask to see this at any time. If the evidence is deemed 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, you will also need to be aware of the distance sales rules that require you to register for VAT in other member states of the EU, covering you in the event that sales to that country exceed a defined threshold.
What is Authorised Economic Operator (AEO) status?
AEO status is an internationally recognised quality kitemark, used by companies to demonstrate their secure role in the international supply chain. It denotes that their customs controls and procedures are efficient and in line with EU standards.
Exporters, importers and logistics firms have relied on the AEO scheme for many years as a means of simplifying customs procedures, in some cases gaining the right to fast-track their shipments through certain safety and security processes. Many companies are seeking AEO status as a means of ensuring their import and export activities can carry on seamlessly after Brexit.
By seeking expert VAT advice, you will be able to determine whether or not AEO status will be beneficial for your company’s goals.
Get in touch with our expert team at The VAT People for more information on how to handle your VAT responsibilities when importing and exporting goods. Call us on our free helpline at 0333 3638 012 or complete our contact form with any other queries.
To find out more about the people who’ll be working alongside you to make the most out of your VAT opportunities, go to our team page. You can also visit our sister service The Customs People for more specialised advice on customs and AEO issues.
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