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HMRC internal manual

VAT Export and Removal of Goods from the UK

Assessments, adjustments and demands for tax: When to notify an assessment in respect of export errors

Traders must be given the opportunity to satisfy the conditions imposed in Notice 703 or Notice 725. This means that unless we have evidence of a domestic supply, we are not entitled to disallow zero rating or to make and notify an assessment until the relevant time limits allowed to satisfy the conditions have expired (but note the position regarding EU VAT numbers in VEXP90300).

The ECJ decision in Teleos PLC can limit the circumstances in which an assessment can be issued to reverse the zero rating of a removal or export. Before deciding to make an assessment consider whether the Teleos principles apply – see VEXP70400.

If a trader has not met the appropriate conditions for zero rating the supply, and the Teleos principles do not apply, the notification of an assessment should be timed as follows:

Compliant traders

In cases where the trader is compliant and operates a system which normally ensures that all the conditions are met, exceptionally the trader may be given additional time to obtain satisfactory evidence of export or removal. However, in view of penalty and interest implications, no longer than one month should be granted. If the trader is still unable to produce acceptable evidence of export or removal then an assessment should be notified for the period in which the original time limit expired.

In this situation, the trader should be reminded in writing of the correct procedures to be followed in the future, including references to the appropriate paragraphs of Notice703 or Notice 725. They should also be advised that no future extensions of time will be allowed unless there are genuinely exceptional circumstances.

Non-compliant traders

Where the trader

  • has made little or no attempt to ensure that evidence of export or removal is held or that the other conditions are met, or
  • has previously been warned in writing about failure to comply with the conditions set out in Notice 703 or Notice 725,

no extension to the original time limit should be allowed and an assessment should be notified for the period in which the time limit for meeting the appropriate conditions expired.