Common VAT Problems

5. Overseas VAT Issues

5.1 Imports of goods from another EU country ('acquisitions') would generally be zero-rated for VAT purposes.

• You must provide your UK VAT number to the supplier.
• You must account for UK VAT in your VAT return. But as long as you are making taxable supplies you can reclaim the VAT in the same return.

5.2 Imports of goods from outside the EU attract VAT, at UK rates, on entry and may also attract Customs duty.

• Customs duty is not recoverable.
• To reclaim the VAT, you need to have VAT certificate C79 issued by HM Revenue & Customs (HMRC) after importation.
• You may be able to defer paying the VAT.

5.3 Exports of goods to VAT-registered buyers in other EU countries ('dispatches') do not usually attract VAT.

• You will need to get a valid domestic EU VAT number from each customer and quote this on invoices. If your customer is not VAT registered, you must charge UK VAT on the sale. This could give rise to EU registration requirements if your sales volume there is high enough.

5.4 Exports of goods to countries outside the EU are zero-rated.

• You will need evidence that the goods have left the UK within certain time limits.

5.5 If you trade with the EU you are required to supply details of your transactions. The system used to collect such details is known as Intrastat. The information you must declare depends on whether the value of your arrivals (purchases or imports) or dispatches exceed the £260,000 threshold.

• If your dispatches or arrivals fall below the threshold you only have to declare the value in boxes 8 and 9 on your VAT return.
• If they go above the threshold, you must also submit a supplementary declaration giving more detailed information.

5.6 The rules on the import and export of services are complicated, so take advice.