Find out if you can zero rate VAT if you sell, lease or hire out a freight container for export from the UK.
This notice cancels and replaces Notice 703/1 (February 2010).
This notice applies to supplies made after the UK left the European Union.
It applies to supplies made in Great Britain exported out of the UK and to supplies made in Northern Ireland exported out of the UK to non-EU destinations.
References to UK should be construed accordingly.
Sales between Northern Ireland and the EU are covered in Notice 725 Single Market
Find out what you need to do if you are making sales of goods between Great Britain and Northern Ireland or from Northern Ireland to the EU.
1.1 Information in this notice
This notice explains the special VAT arrangements under which you can zero rate the supply by way of sale, lease or hire of freight containers for export.
It does not cover other supplies related to freight containers, for example, management charges which are subject to VAT under the normal rules (see the VAT guide (Notice 700) and Place of supply of services (VAT Notice 741A)).
1.2 Changes to this notice
This notice has been updated to reflect changes to the VAT treatment of supplies of goods and services following the UK’s departure from the EU.
1.3 Who should read this notice
Anyone selling, leasing or hiring out freight containers for export.
1.4 The law
The legal basis for these arrangements is contained in the:
- VAT Act 1994, Sections 30(6) and 30(8)
- VAT Regulations 1995 (SI 1995/2518) regulations 117(2) and 128
1.5 Legal status of this notice
Under UK VAT law, HMRC may specify conditions for the zero-rating to apply. This notice lays down the conditions, which must be met in full, for supplies of containers to be zero-rated. Some or all of paragraphs 3.1, 3.2, 3.3 and 4.2 have force of law
2. Containers, their supply and liability
2.1 Liability of supply of containers
The supply of containers in the UK is, in principle, taxable at the standard rate. The supply of containers for export from the UK may be zero-rated as long as the conditions set out in this notice are met. See:
|4||Lease or hire|
2.2 Definition of a ‘container’
For VAT purposes, a container is an article of transport equipment (lift-van, moveable tank or other similar structure):
- fully or partially enclosed to constitute a compartment intended for containing goods
- of a permanent character and accordingly strong enough to be suitable for repeated use
- specially designed to facilitate the carriage of goods, by one or more means of transport, without intermediate reloading
- designed for ready handling, particularly when being transferred from one mode of transport to another
- designed to be easy to fill and to empty
- having an internal volume of 1 cubic metre or more
The term ‘container’ includes:
- the accessories and equipment of the container, appropriate for the type concerned, as long as such accessories and equipment are carried with the container
- air transport containers whatever their internal volume
- ‘flats’ or ‘Lancashire flats’ (bases with or without head and tail boards, which are designed to carry goods and have the floor area of a 20 foot or 40 foot container), although not strictly covered by this definition we treat them in the same way
The term ‘container’ does not cover:
- pallets, road vehicles and trailers including those with fixed tanks
- vehicles, accessories or spare parts of vehicles
3. Sale of containers for export
This section should be read in conjunction with VAT on goods exported from the UK (Notice 703).
3.1 Conditions for zero rating the sale of a container for direct export
For VAT purposes a direct export occurs when the supplier of the container sends it outside the UK and is responsible either for arranging the transport, or for appointing a freight agent.
You must meet certain conditions before you can zero rate supplies of containers for export, these conditions are:
- the container is exported within 3 months of supply
- obtain official or commercial evidence of export within 3 months of supply
- keep supplementary evidence of the export transaction
- comply with the law and conditions of this notice
The following section has force of law.
A supply of a container sent to a destination outside the UK is liable to the zero rate as a direct export where:
- the container is exported within the specified time limits as set out in Notice 703, paragraph 3.5
- obtain either official or commercial evidence, or both, of export set out in Notice 703 paragraphs 6.2 and 6.3 within the time limits given
- keep supplementary evidence of the export transaction set out in Notice 703 paragraph 6.4
3.2 Conditions for zero rating the sale of a container in the UK for indirect export
For VAT purposes, an indirect export occurs when an overseas customer or their agent collects or arranges for the collection of the container from the supplier and then exports it. The conditions, where met, allow a chain of supplies to be zero-rated This following section has force of law.
To zero rate the sale of a freight container for indirect export, you must obtain a written undertaking from your customer that:
- the container will be exported
- it will not be used within the UK except for:
- a single domestic journey before export of the container, on which inland freight may be carried between 2 points within the UK - this is allowable only if the route brings the container reasonably directly from the point of supply to the place where it’s to be loaded with export cargo or exported
- international movements of goods, which may include a journey within the UK for the purpose of loading or unloading the goods
- records accounting for the use of the container will be maintained, as specified in paragraph 3.3
3.3 Records you must keep if you’re supplied with a zero-rated container for export
This section has force of law.
If you’re supplied with a zero-rated container you must keep sufficient records to satisfy HMRC that:
- the container has not been used in the UK (except as allowed under paragraph 3.2)
- it has been exported
- you’ve sold or leased it to someone else and have obtained the undertaking referred to in paragraph 3.2
4. Lease or hire of containers
4.1 Treatment of lease or hire
The lease or hire of a container is a supply of services and not the supply of the container.
You should refer to the rules set out in Notice 741A: place of supply of services to find out if the supply will be subject to VAT in the UK.
4.2 Treatment of hire
Generally the hire of a container with a place of supply within the UK is a standard-rated supply, however in certain circumstance the supply maybe zero-rated.
The rest of this paragraph has force of law.
If your customer is to remove the container from the UK for the duration of the hire, you may zero rate the lease of the container. You must obtain from your customer a written undertaking as set out in paragraph 3.2.
4.3 Where you lease a container from an overseas company
If you, as a UK business, lease containers from companies outside the UK, you’ll normally account for tax under the ‘reverse charge’ procedure. (See VAT Notice 741A: place of supply of services.)
4.4 Liability of incidental charges
Where under the terms of a lease agreement, the costs of incidental services are charged to the lessee, these costs are regarded as part of the consideration for the leasing of the container. This includes items described as repair, delivery, regulator and handling charges, extra rental, or a charge for an option to terminate the lease at an earlier date. The treatment of the incidental services will be the same as the treatment of the leasing of the container.
5. Repairs to containers
To work out the VAT treatment for the supply of repair services you will need to refer to the rules set out in Place of supply of services (VAT Notice 741A) for full information.
Containers temporarily imported from outside the UK solely for repair and so on, may be eligible for relief from payment of import VAT (see Imports (VAT Notice 702)). The repair service may also be zero-rated.
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