Basic principles: Use of customer’s EC VAT number
Zero-rating may be based on the customer’s VAT registration number in any other Member State, not necessarily the one to which the goods are being consigned. If the customer’s number is not available the supply must not be zero-rated. However, if the supplier charges VAT to an EC customer who subsequently provides a valid VAT registration number in another Member State the supplier can issue a credit note for the amount of VAT charged, zero-rate the supply and include the transaction on the next EC sales list and Intrastat Supplementary Declaration, where appropriate.
Invalid EC VAT numbers
Paragraphs 4.7 to 4.12 of Notice 725 The single market provide advice on the importance of checking the validity of the customer’s EC VAT number, and the consequences if an invalid number is used. If a trader has quoted an invalid VAT registration number for his customer on a sales invoice, zero-rating is not to be disallowed if we are satisfied that all reasonable steps have been taken to confirm the validity of the number – the onus is on the trader to demonstrate that the checks undertaken were reasonable in the circumstances of the supply. Notice 725 gives some examples of when we will consider that reasonable steps have not been taken. These include
- if the VAT number quoted does not conform to the published format in the relevant Member State
- if we have previously informed a trader that the number is invalid
- if the trader uses a number that they know does not belong to their customer.
The Commissioners’ condition that the customer must be VAT registered in another Member state was examined by the High Court in JP Commodities Ltd – see VEXP20600 for details.