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HMRC internal manual

VAT Personal Exports: Retail Exports

Personal exports - retail exports: Assurance at the retailer: Checks on Direct Reclaim system

Evidence for deduction of input tax

Refund companies operating a direct reclaim system will need invoices from retailers to support their claim for deduction of input tax (VATRES3500). If a full VAT invoice is not produced by the retailer, refund companies use a variation of the official version of the VAT407 as their purchase invoice. These invoices will take the form of one of the copies (identified as “RETAILER COPY”) from a multi-part 407 and must include all the information required on the official version of the VAT 407. For input tax purposes it is particularly important that it contains the retailer’s VAT registration number. This is essential to verify that

  • the retailer is VAT registered, and
  • VAT was included in the price paid by the overseas customer for the goods supplied by the retailer to the refund company.

Failure to produce acceptable evidence should result in input tax being disallowed and an assessment being issued.

Accounting for output tax

You should also check that the retailer has accounted for the output tax on the business-to- business sale to the refund company and has not subsequently zero-rated the sale as an export under VAT retail export scheme.