Valuation

Tertiary legislation about VAT valuation.

The following has force of law under Paragraph 11, Schedule 6 and paragraph 12 Schedule 9ZA of the Vat Act 1994 and was originally published in VAT Notice 700

1. Introduction to output tax — Values expressed in a foreign currency

For VAT purposes, amounts of money must always be expressed in sterling. If you need to convert an amount from a foreign currency into sterling, you must do so on the following basis:

(a) unless you have adopted one of the alternatives set out in (b) or (c), you must use the UK market selling rate at the time of the supply — the rates published in national newspapers will be acceptable as evidence of the rates at the relevant time

(b) as an alternative, you may use the period rate of exchange published by HMRC for customs purposes — the VAT general enquiries helpline can give you details of particular period rates, you may adopt this alternative for all your supplies or for all supplies of a particular class or description — if you opt for only a particular class or description, you should make a note of the details in your records at the time of adoption

You do not need to notify HMRC in advance if you wish to adopt this alternative, but having made such an option, you cannot then change it without first getting agreement by writing to the VAT Written Enquiries Team.

(c) you may apply in writing to the VAT Written Enquiries Team to use a rate — or method of determining a rate — which you use for commercial purposes but which is not covered by (a) or (b)

In considering whether to allow such applications, HMRC will take into account:

  • whether the proposed rate or method is determined by reference to the UK currency market
  • whether it is objectively verifiable
  • the frequency with which it’s proposed to update it (forward rates or methods deriving from forward rates are not acceptable)

Whatever rate or method you adopt, the appropriate rate for any supply is that current at the time of the supply.

If you make supplies that fall within the Tour Operators Margin Scheme, read Tour Operators Margin Scheme (VAT Notice 709/5) for details of how to convert the value of your purchases.