HMRC internal manual

VAT Export and Removal of Goods from the UK

VEXP80320 - Examples of various export scenarios and VAT treatments: Examples involving exports to associated companies outside the UK: UK business customer arranges for delivery to their overseas address

In this example of an indirect export

  • A UK business company has a non-UK branch.
  • The UK customer makes taxable supplies from the UK establishment.
  • A UK supplier sells goods for export to the non-UK branch and sends the invoice to the customer UK office.
  • The UK supplier delivers the goods to a freight forwarder employed by the customer (or the freight forwarder collects the goods from the UK supplier).
  • The freight forwarder exports the goods to the non-UK branch on behalf of the customer.

The supply cannot be zero rated because

  • the non-UK branch is part of the UK company
  • the UK company has an establishment in the UK from which it makes taxable supplies

therefore, the supply is made to a taxable person with a business establishment in the UK, with a subsequent transfer of own goods to the non-EU branch

The conditions set out in regulation 129 or regulation 133B of the VAT Regulations 1995

This applies equally

  • where the transaction is invoiced to the UK customer or
  • where the invoice is sent to their non-UK branch.

However, zero-rating can apply where:

  • The customer’s entities are legally separate even within the same corporate group.
  • The customer makes no UK supplies, or they are not taxable supplies.