VAT on exports to EU

VAT on exports to EU

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I am not an expert on VAT on imports and exports, but I have read the HMRC guidance.  A prospective clients wishes to establish a UK ltd company and register it for VAT.  The purpose of the company is to purchase goods within the UK and export them to VAT registered companies in other EU countries, predominantly in eastern Europe.  The company will not have any UK customers.  Under the guidance the UK company will not charge VAT on the invoice, as long as the correct procedures are followed (such as including the importer's VAT number on the invoice).  The UK company will reclaim the input VAT which it has paid to suppliers but will have no output VAT, hence will always be receiving VAT repayments from HMRC.  Have I understood this correctly?  Any particular issues to be aware of?  

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By richardb84
02nd Oct 2014 15:31

Reporting requirements

Your understanding is correct, albeit the sales will be intra-community dispatches, rather than exports as the goods will remain within the EU.

When your client makes the sale, they can make it free of VAT provided the customer's EU VAT number (not a UK number) is shown on the invoice. Your client will also need to retain evidence proving the goods physically left the UK.

As well as declaring the sales on the UK VAT return, your client will l need to declare the sales on the EC Sales List and potentially intrastat (depending on the value).

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By claudialowe
02nd Oct 2014 16:17

There will be amounts in box 1 of the VAT return, as in that box you will have to declare the VAT that should have been charged, albeit for an identical amount to be reclaimed in box 4, together with the other purchases.

 

One of the questions when completing the VAT registration form is "do you expect to regularly receive VAT repayments" - I guess yes to that question would prompt a further question of why!

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By richardb84
02nd Oct 2014 16:25

Not EU purchases


If purchases are made only from UK suppliers there will be no entry in box 1, only box 4!There is no output VAT to declare.

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By claudialowe
02nd Oct 2014 16:44

Oooooops!

Me bad (as my kids would say!) - getting it the wrong way round - sorryyyyyyyyyyy!

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By dlapish
02nd Oct 2014 16:49

Thank you both for your helpful and prompt responses.  Much appreciated.

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