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HMRC internal manual

VAT Export and Removal of Goods from the UK

Assessments, adjustments and demands for tax: Satisfactory evidence produced after an assessment has been issued

The CJEU (BDV Hungary Trading Kft C-563/12) said that merely exceeding the time limits cannot result in the definitive loss of the right to zero rate. Consequently there is no time restriction for obtaining satisfactory evidence.

Where an assessment is raised and the trader subsequently produces satisfactory evidence of export or removal, it is important to remember that any interest charged on the assessment is still legally due. This is supported in the Court of Appeal case between the Commissioners and Musashi Autoparts Europe Ltd - see VEXP90800.

If satisfactory evidence of export or removal is obtained and produced at a later date, it should be remembered that tax was due at the point when the original time limit for obtaining the evidence expired. An assessment should not be withdrawn simply because evidence has now been produced. How an assessment is treated will depend on the specific circumstances of the case.

As the key consideration will be the interest charged on the assessment it is important to establish when the evidence to zero rate was held (see VEXP 30500), not when it was produced for inspection.  The trader should be advised to make an appropriate adjustment to the VAT return for the period in which the evidence was obtained.  This may be by adjusting a current VAT return, Error Correction Notice or withdrawal of all or part of the assessment.

We are aware of cases where the business held the evidence at the correct time but was unable to locate it when initially requested.  If they can show that they did in fact hold it at the relevant time then the assessment must reflect that.