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HMRC internal manual

VAT Personal Exports: Retail Exports

Personal exports - retail exports: Introduction: The law

The law

Type of legal provision Legislation
EC law The Principal VAT Directive 2006/112/EC is a recast of the Sixth Directive and became law on 1 January 2007. The current provisions [with the 6th Directive reference shown in brackets] are:
  • Article 131 [Article 15 preamble]
  • Article 147 [Article 15(2)]    
      UK primary legislation VAT Act 1994 (VATA 94)
  • section 30(8) and
  • section 30(10)    
      UK secondary legislation VAT Regulations 1995 (SI 1995/2518)
  • 117(4), 117(7A), 117 (7B), 117(7C), 117(7D) and
  • 131(1)    
      Tertiary legislation The conditions set out in Notice 704VAT Retail Exportshave the force of law.

EC lawArticle 131 of the EC legislation states that Member States shall lay down conditions that apply to exemptions (zero-rating in the UK) to prevent evasion, avoidance or abuse. Each Member State sets conditions for operating the scheme.

Article 147 provides the legal basis for the basic principles of VAT retail export scheme in UK law.

UK primary lawSection 30(8) of the VAT Act 1994 permits the zero-rating of goods supplied for export to a destination outside the EC subject to compliance with conditions imposed in regulations or elsewhere.

Section 30(10) permits the Commissioners to demand payment of output tax from the person to whom the goods were supplied or any person found in possession of the goods in the UK where:

  • goods supplied for export have not been exported; or
  • relevant conditions for zero-rating the supply have not been met.

UK secondary lawThe Value Added Tax Regulations 1995 provide definitions and conditions for zero-rating:

  • Regulation 117(4) identifies goods not covered by VAT retail export scheme;
  • Regulation 117(7A) defines overseas visitor;
  • Regulations 117 (7B) – (7D) define what is meant by establishment, and the documents to be used to establish domicile or residence; and
  • Regulation 131(1) outlines the conditions for zero-rating goods supplied under the VAT retail export scheme.

Public Notices

Notice 704VAT Retail exportslays down the conditions that must be met in full for supplies of goods for export outside the EC under VAT retail export scheme to be zero-rated. In this respect the notice has the force of law.

A simplified notice aimed at travellers, Notice 704/1VAT Refunds for travellers departing fromthe European Community, available in English, Arabic, Japanese and Spanish, highlights the main aspects of the scheme.