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VAT return and out of scope

VAT return and out of scope

Hi Could anyone please clarify the Box 6 treatment in the VAT return for the following:

Sale from UK to USA

As I understand it there are two available treatments:

1. Code the sale out of scope so it would appear nowhere on the VAT return. Company sales would then not agree to Box 6 total.

2. Code the sale zero rated (assume criteria for this are met) Sale shows in Box 6 of the VAT return. Company sales agree to Box 6.

Is this correct?

If you meet the criteria for zero rating, do you have a choice about which method you choose?



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19th Apr 2012 15:56

Outside scope for VAT

VAT is only chargeable on sales made to entities in the United Kingdom economic space ie including Northern Ireland.

Sales to US residents or companies fall outside scope for VAT so nil value charged.

In the online system if the VAT on sales percentage is significantly different from 20% of sales you get a prompt message asking you to confirm that this is the case.

If, this event is a regular transaction overtime HMRC "learns" your company's activities and will not raise any suspicions. However, if this is a once in while transaction that is material in relation to your company's sales then expect a visit.


I think your choice is some what circular. I would opt for  zero vat charged on sale then  company sales declared as per the sales day book ie box 6

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20th Apr 2012 11:44

I don't agree with Chris

It's far from correct to say that VAT is only chargeable on sales made to UK entities. VAT is due on all supplies of goods and services (made by a taxable person in the course of furtherance of a business carried on by them) made in the UK, unless they're exempt. Those supplies might, however, fall to be zero-rated.

There are then place of supply rules to determine where the supply takes place. If the place of supply is outside the EU, then the supply is outside the scope of VAT (within the EU, but outside the UK, it's outside the scope of UK VAT).

Since you refer to non-EC exports (strictly all exports are non-EC, as they are dispatches if they go to another EU state), I assume that you are referring to goods. Generally speaking, unless the goods are installed goods, the supply will take place in the UK. However, since the goods are destined for export, they are zero-rated (not outside the scope).

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20th Apr 2012 13:13


It appears that the evidence required by HMRC to zero rate is quite extensive.

Our shippers usually give us a receipt and hold onto airway bills etc on our behalf.

In practice is this sufficient?


Many thanks


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