Does VAT need to be charged for goods shipped to outside EU

Does VAT need to be charged for goods shipped to o

Didn't find your answer?

A cleint of mine based in the UK received an order from a UK company to ship computer hardware directly to UAE.  I assume this would be zero rated for VAT

Replies (7)

Please login or register to join the discussion.

avatar
By shaun king
19th Oct 2016 10:21

you assume correct - so long as they have commercial evidence that the goods left the UK.

Thanks (0)
avatar
By martinscutt
19th Oct 2016 11:10

I disagree with zero rating on the info given. Selling to a UK based company or even a foreign company with UK presence is standard rated. Any VAT export issues are the customers problem not you clients.

See VAT notice 703. Your clients situation sounds like 4.1, but even if company A did not exist and your clients customer was exporting for self use that is still a sale to a UK company not an export by your client.

Thanks (0)
Replying to martinscutt:
avatar
By spidersong
19th Oct 2016 11:59

But the question is who is exporting, you've gone for 'even if the clients customer was exporting for self use'.
My reading is that the seller will be the exporter.
If they're exporting then they can zero rate. So long as this is a contract for delivered goods and those goods are delivered outside the EU then zero rating can apply.

Thanks (0)
Replying to martinscutt:
Portia profile image
By Portia Nina Levin
19th Oct 2016 17:02

You have missed the point of the example in paragraph 4.1.

If A (non-EU) order goods from B (UK) who in turn orders goods from C (UK), but requires C to deliver the goods directly to A on B's behalf (implicitly with B assuming title to the goods immediately prior to their journey from C to A), then C's supply to B is in the UK (UK-taxable) and B's supply to A involves export of the goods (zero-rated).

However if A (UK) orders goods from B (UK), but wants those goods delivered to its non-EU establishment, then A's supply to B involves their export and is zero-rated.

Thanks (0)
Routemaster image
By tom123
19th Oct 2016 17:27

Edited -
I have removed my answer - as it was more akin to a real life example than the points in the OP. In my real life example, my goods were sold and delivered to a UK customer for onward delivery by him to Pakistan. Everyone knew they goods were going there ( as they were defence related), but our customer initially assumed zero rating from us.
My UK customer was the exporter.

Upon reading Portia's comments I see the error of my ways - and realise that in the OP he was actually exporting the goods.

The rule of AA - reply in haste repent at leisure.

Thanks (0)
Replying to tom123:
Portia profile image
By Portia Nina Levin
19th Oct 2016 17:07

Why do people insist on coming up with their own version of the law.

If someone makes a supply that involves the removal of the goods from the UK, then that supply is zero-rated, as Shaun and Spidersong (two of the resident VAT experts) have said.

The problem is that people are confusing the rules relating to services with those relating to goods.

So if a UK customer orders goods, with the UK supplier being charged to deliver those goods to a place outside the UK, then the UK supplier's supply is zero-rated (despite the fact that the supply is being made to a person in the UK), subject to holding evidence of removal of the goods from the UK. That is what the law says. Sweet cheeses.

Personally, I thought it was a bit of a dumb question. That was until it attracted some grossly incorrect answers.

EDIT: On reflection, I think that, rather than confusing the rules for supplies of services with the rules for supplies of goods, the dissenting parties are assuming that UK supplier, UK orderer, and UAE destination are three separate parties with UK orderer acting as intermediary and taking title to the goods whilst still in the UK.

To get the correct answer, it is necessary to know whether UK orderer is the end customer or an intermediary supplier, and what the applicable incoterms are.

Thanks (1)
Replying to Portia Nina Levin:
Routemaster image
By tom123
19th Oct 2016 17:31

I have edited / removed my reply.

In real life I do know what I am doing, honest.., I just sometimes manage to f** up my replies!!

Thanks (0)