In case you are running a business involved in imports or exports of products or simply makes sales to countries outside the UK, you should learn a few things about VAT on imports and exports. Learning more about these rules will guarantee that your business will go on with its operations smoothly and that you won’t be fined or penalized by the authorities. The fact is that imports and exports are regulated by complex rules.

Generally speaking, VAT is payable associated with all imports. The rate is the same as the ones used on products or services in the United Kingdom. Of course, there’s no need to register for VAT in case you are importing products, but in case you don’t register you will not get an opportunity to ask for VAT returns. In case your purchase products in the EU, you will have to declare output tax on these products on the VAT return request. But, you can reclaim input tax on the products that are covered with the normal rules and regulations.

On the other hand, in case you import products from a country outside the European Union, you will have to cover import VAT as well as duty before the HM Revenue & Customs releases the products.  Keep in mind that “duty” is an independent and additional tax which is calculated based on the price of imported products. On top of that, the amount of duty is not fixed and it depends on the type of goods and the country of origin.

The bad news is that you can’t reclaim duty if you are a VAT registered business. However, you should not expect duty on products which come from the European Union or which have been imported from a non-EU country, but the charges were paid. When they get into the EU there are no duties left to be covered, but this is only the case when the products are shipped from one EU country to another EU country.

In case you import products from a non-EU country, you are able to store these goods in a HMRC-approved warehouse if you want to. At the same time, you can pay Vat and import duty once the products leave the facility if you want to. That’s a great option especially if you don’t want to sell the products right away.

In case you want to re-export the products once they are processed, you can opt for Inward Processing Relief. In this way, VAT and duty must be covered only in case you sell these products in the United Kingdom or if they don’t comply completely with the conditions of the specific scheme. In case you import goods on a regular basis, you should take a deferment account into consideration. This account allows you to take care of VAT and duty on a month-by-month basis. It’s free to get an account like this and the best part is that you can prolong payments for 30 or more days and your products will usually be cleared faster. It is very likely that you will have to provide a bank guarantee even though the rules are changing and guarantees like this are becoming obsolete. However, not all businesses can use this option which means that you should check your eligibility.

If you want to reclaim VAT on imports, then you must fill the VAT return form for the period when the goods were imported. In this case, you’ll receive a C79 certificate to highlight the import VAT you have covered. In addition, you will have to store this certificate as proof which should be shown to VAT officers.

VAT on exports

In case you export products outside of the European Union, it is possible to zero-rate the sale, but only if you keep commercial and official documents of product removal from the United Kingdom. You should expect similar rules related to sales of almost all goods to clients registered for VAT in the European Union. In situations like this, you will also have to get and record the VAT registration number of these companies on the invoice. In case you sell products in significant numbers to non-registered clients in the EU you may have to register for VAT in other EU countries.

In case your business is focused on trade with European countries, you may have to provide more detailed info also known as INTRASTAT Supplementary Declarations.

As you can see, these rules and regulations related to the export of goods and services are very complex and that’s why it’s a good idea to look for professional help.


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