Exports and VAT

Although exports are generally VAT exempt that VAT exempt status must be supported by documentation.

Exports as VAT Exempt Transactions

The export of goods and services is largely VAT exempt. There are however certain procedures which have to be observed in order for such business to qualify. Because the rules can sometimes be complicated it is always advisable to check with your accountant; freight forwarder or HMRC direct beforehand but the following gives a general guide.

Exports to a non EU country – VAT Documents

Invoicing goods and services for export without charging VAT is subject to a time limit. The requirement is that these must be shipped within three months of the original order for them. The business is expected to maintain records of all individual export transactions for inspection by Customs including the following:

A copy of the customer’s order
A proof of shipment (bill of lading - trucking receipt - airway bill)
A copy of your invoice

Exports to an EU country – VAT exempt: 

There is no time limit between an order and delivery to export customers who are located within the EU. Your customer's local VAT registration number must appear on the invoice to enable customs clearance at their end. The same documents for export to a non - EU destination (see above) must also be retained for possible inspection by HMRC to validate their VAT free status:

Export delivery charges – VAT exempt: 

Regardless of whether exports are within or beyond the EU you can charge your customers for delivery free of VAT providing the delivery charge you intend to make is clearly stated on your customer’s original order to you. This is classified by HMRC as a single supply transaction.

If the original order does not show a delivery charge and you subsequently agree to pay for the delivery, this would be classified by HMRC as a separate supply transaction to which VAT is to be added.

Exports and Government Documentation

In the case of the export of goods regardless of their country of origin to outside of the EU there is a document known as an export declaration that has to be submitted to HMRC’s national export system. This does not apply to exports to a country within the EU.
Most exporters rely on their shipping agents to carry out this declaration on their behalf however so it is worth checking with your agent to confirm that they are prepared to undertake this.
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