VATNIEU4910 - Call-off stock key conditions
In order for the simplified rules for call-off stock arrangements to apply, certain key conditions must be met at the time of removal of the goods from the state of origin to the state of destination:
- a call-off stock agreement is in place with the customer.
- the supplier is removing the goods to the state of destination with the intention of supplying those goods to the customer after their arrival in the state of destination.
- the supplier does not have a business establishment or other fixed established in the destination state.
- the customer is VAT registered in the state of destination and the supplier knows the customer’s identity and VAT registration number.
- the supplier records the removal of the goods in the register referred to in the prescribed records are maintained section below.
- the customer’s VAT registration number in the state of destination is reported on the supplier’s EC sales list.
Further explanation of some of the key conditions are explained below.
The legislation covering the key conditions is in Paragraph 57(1) of Schedule 9ZA.
57(1) This Part of this Schedule applies where:
(a) goods forming part of the assets of any business are removed
(i) from Northern Ireland for the purpose of being taken to a place in a member state, or
(ii) from a member state for the purpose of being taken to a place in Northern Ireland,
(b) the goods are removed in the course or furtherance of that business by or under the directions of the person carrying on that business (“the supplier”),
(c) the goods are removed with a view to their being supplied in the destination territory, at a later stage and after their arrival there, to another person (“the customer”),
(d) at the time of the removal the customer is entitled to take ownership of the goods in accordance with an agreement existing between the customer and the supplier,
(e) at the time of the removal the supplier does not have a business establishment or other fixed establishment in the destination territory,
(f) at the time of the removal the customer is identified for the purposes of VAT in accordance with the law of the destination territory and both the identity of the customer and the number assigned to the customer for the purposes of VAT by the destination territory are known to the supplier,
(g) as soon as reasonably practicable after the removal the supplier records the removal in the register provided for in Article 243(3) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, and
(h) the supplier includes the number mentioned in paragraph (f) in the recapitulative statement provided for in Article 262(2) of Council Directive 2006/112/EC.
Call-off stock agreement.
A call-off stock agreement is a contract between a supplier and its customer, which entitles the customer to call the stock off – that is, to take ownership of the goods.
For the purposes of applying the new rules, it is recommended that the contract also provides that:
the supplier will remove the goods from the state of origin to the state of destination.
the goods are to be located in the state of destination when they are to be called off.
A contract that simply provides for the goods to be made available on the demand of the customer but does not set out how that is to be achieved or where the goods are to be stored before they are made available does not provide evidence that the conditions for the new simplified rules are met.
Contracting parties are recommended to have an express provision in the contract to state whether or not it is a contract to which the parties wish Article 17a of Directive 2006/112/EC to apply.
Established and business establishment
For the purposes of these rules a business is said to be established if:
- the business is registered in a member state under similar arrangements to registering at Companies House in the UK
- the business (whether or not related to the call-off stock arrangements) is conducted from premises through the presence of the means to conduct that business.
- the warehouse where the call-off stock is to be located is owned (or rented) and directly run by the supplier with their own employees.
A VAT registration does not of itself constitute being established or having a fixed establishment.
Ownership of the warehouse which is operated by an independent third party does not of itself constitute being established or having a fixed establishment.
Prescribed records are maintained.
As a condition of the application of the new simplified rules, the supplier must record in a register (the Call-off Stock Register) the transfer of stock to the state of destination under the call-off stock arrangements.
When the goods are physically removed to the state of destination, a record must be made of the transfer of the goods. The Call-off Stock Register must also be kept up to date, and it must record when goods are called off.
The information that must be contained in the Call-off Stock Register is set out in Schedule 9ZA of VATA 1994 makes provision in relation to Northern Ireland for the continued application of EU VAT Implementing Regulations 282/2011 on record keeping for call-off stock (the “Implementing Regulation”).
The Implementing Regulation requires the supplier’s Call-off Stock Register to record:
a. the
state of origin and the date of dispatch or transport of the goods
b. the VAT registration number of the customer in the state of destination
c. the state of destination, the VAT registration number of the warehouse
keeper, the address of the warehouse at which the goods are stored upon arrival
and the date of arrival of the goods in the warehouse
d. the value, description and quantity of the goods that arrived in the
warehouse
e. the VAT identification number of the taxable person substituting for the
customer, where the Substitution Rule conditions are satisfied
f. the date on which the goods are called-off by the customer in accordance
with the conditions for the simplified treatment the taxable amount,
description and quantity of the goods so called-off by the customer and the
customer’s VAT registration number in the state of destination
g. the taxable amount, description and quantity of the goods affected by a relevant event and the date of the relevant event
h. the value, description and quantity of the returned goods and the date of
the return of the goods as referred to as Returned Goods
The Implementing Regulation requires the customer’s Call-off Stock Register to record:
a. the VAT
registration number of the supplier of the goods subject to the call-off stock
arrangements
b. the description and quantity of the goods intended for him
c. the date on which the goods intended for him arrive in the warehouse
d. the taxable amount, description and quantity of the goods supplied to him
and the date on which the customer’s intra-community acquisition of the goods
is made
e. the description and quantity of the goods, and the date on which the goods
are removed from the warehouse by order of the supplier
f. the description and quantity of the goods destroyed or missing and the date
of destruction, loss or theft of the goods or the date on which the goods were
found to be destroyed or missing
Where the customer is not the warehouse keeper, so will not necessarily have access to all the information, their Call-off Stock Register does not need to contain the information referred to in points (c), (e) and (f).
Paragraphs 64 and 65 of schedule 9ZA provides for the keeping of records.
Record keeping by the supplier
64 In a case where the origin territory is Northern Ireland, any record made by the supplier in pursuance of paragraph 57(1)(g), 62(b) or 63(2)(d) must be preserved for such period not exceeding 6 years as the Commissioners may specify in writing.
Record keeping by the customer
65(1) In a case where the destination territory is Northern Ireland, the customer must as soon as is reasonably practicable make a record of the information relating to the goods that is specified in Article 54A(2) of Council Implementing Regulation (EU) No. 282/2011 of 15 March 2011 laying down implementing measures for Directive 2006/112/EC on the common system of value added tax.
(2) A record made under this paragraph must:
(a) be made in a register kept by the customer for the purposes of this paragraph, and
(b) be preserved for such period not exceeding 6 years as the Commissioners may specify in writing.
Notice 725 specifies the conditions having force of law, which provide for.
- A supplier that dispatches goods from the UK must preserve the records it keeps in the Call-off Stock Register for 6 years.
- A customer which calls-off goods in the UK must preserve the records it keeps in the Call-off Stock Register for 6 years.
Contracting parties are recommended to set out in the contract(s) how they intend to fulfil the record keeping requirements, including how the necessary information is to be communicated between the parties.
Failure to make or retain the required records can incur a penalty (Section 69(2)).
(2) If any person fails to comply with a requirement to preserve records imposed under paragraph 64 or 65(2)(b) of Schedule 9ZA or paragraph 6(3) of Schedule 11, he shall be liable, subject to the following provisions of this section, to a penalty of £500.