Personal exports - retail exports: Assurance at the retailer: Validity of stamps
You should see a variety of different customs export stamps on forms, usually with a unique rotation number. Member-states were required to submit to the EC Commission copies of stamps used for certification at point of exit from the EC. Copies of the stamps submitted are held at the Retail UoE. If refund forms are found to be endorsed by false customs stamps, you must consider the impact of the ECJ judgment in Netto Supermarket before taking any action.
ECJ case reference C-271/06 - Netto Supermarkt GmbH
This case was referred to the ECJ by Germany. Over several years Polish nationals fraudulently obtained VAT refunds from Netto by collecting discarded till receipts and then counterfeiting proofs of export by means of forged refund forms and forged customs stamps. The fraudulent conduct was discovered in 1998 when Netto contacted customs to find out whether a frequently used stamp and the corresponding paperwork were counterfeit. The customs office initially considered that the stamp and paperwork were genuine. After further examination, customs found that the documents and stamp had been falsified and so required Netto to pay tax in respect of these supplies.
The ECJ found that
- It is not contrary to Community law to require the supplier to take every reasonable step to ensure that the transaction did not lead to his participation in tax evasion,
- it would clearly be disproportionate to hold a taxable person liable for the shortfall in tax caused by fraudulent acts of third parties over which he has no influence whatsoever.
- Accordingly, the fact that the supplier acted in good faith, that he took every reasonable measure in his power and that his participation in fraud is excluded are important points in deciding whether that supplier can be obliged to account for the VAT after the event.
This ruling does not mean that vague assertions that retailers and refund companies acted in good faith removes our right to assess. The onus remains on retailers to fully satisfy the conditions of the scheme and to take every reasonable step to ensure that transactions do not result in their participation in evasion. Zero-rating can be denied unless the retailer or refund company:
- has operated the Retail Export Scheme in accordance with all the requirements laid down in Notice 704
- can evidence that their systems are sufficiently robust to prevent abuse and exploitation by fraudsters
- could not reasonably have known that the refund documents they relied upon contained false particulars.