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HMRC internal manual

Customs Special Procedures Manual

Tax free shopping: general

Under the VAT Retail Export Scheme (RES) VAT can be refunded to overseas visitors travelling to a final destination outside the EU provided that export takes place within three months of purchase, refer to VAT Notice 704: VAT retail exports on GOV.UK.

If the retailer is approved to use the IP Tax Free Shopping Scheme (TFSS), relief from customs duties may also be claimed on eligible export sales. The simplifications allowed under this scheme can only be justified where the benefit of relief will be passed to entitled customers.

Use of IP is subject to the same conditions and requirements normally applicable. With the following exceptions the usual authorisation checks should apply:

  • only goods eligible under the VAT RES can be approved
  • only retailers who use the VAT RES are eligible to apply
  • applications must be made on form SP3
  • periods for discharge can be approved from the date of entry to IP to the date of sale + 3 months (the 3 months is the time limit for applying for a refund under VAT RES). To simplify accounting of goods remaining in stock, application can also be made to use an inventory system (see Special Procedures generic guidance for full details). Any application to use an inventory system should not be considered unless the trader has a good record of accurately monitoring their period for discharge and does not regularly discharge goods to free circulation.

Form VAT 407 can be accepted in place of the normal IP export declaration, or the traveller’s boarding card reference number supported by a sales invoice.