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HMRC internal manual

VAT Personal Exports: Retail Exports

Personal exports - retail exports: Assessments / appeals

When to raise an assessment

Provided the retailer and the entitled customer follow the procedures in Notices 704 and 704/1, and the instructions on the VAT refund document, operation of VAT retail export scheme should be straightforward. The notices and the VAT refund document state clearly that no VAT refund can be made if the conditions are not met. You can raise an assessment in the circumstances detailed below.

(a) Goods not eligible under the scheme

Notice 704 sets out what may not be sold under the scheme. Adjustment for VAT refunds should be refused where zero-rated items have been shown as standard-rated items on the VAT refund document, or where services supplied with goods have been included for refund.

(b) Export evidence not received

Where there is no satisfactory evidence of export and tax has not been accounted for, an assessment should be issued for the period in which the retailer received the payment for the goods. The assessment should be calculated by applying the VAT fraction to the consideration received.

(c) Out-of-time forms certified in error

Notice 704 clearly states that where goods have been exported after the due date, the supply must not be zero-rated even if the VAT refund documentation has been certified as to exportation, unless a Customs officer has specifically authorised the delay on the form. If the supply has been incorrectly zero-rated an assessment should be issued.

(d) Conditions not complied with

The case of P Gandesha (LON/89/1588Z) is an example of an assessment raised because the conditions under the scheme were not complied with. It is a useful reinforcement of our firm line on export evidence.

This case concerned a UK retailer who had zero-rated, as an export, electrical goods allegedly supplied to a Nigerian customer under the retail export scheme. The scheme provides that the supply of goods to an overseas visitor for export shall be zero-rated subject to such conditions as the Commissioners may impose. The conditions set out in Notice 704 require that the goods supplied must be eligible for sale under the scheme and that the supplier must receive and keep the appropriate evidence of export.

The form VAT407 produced to the control officer by the trader as evidence of export for goods was to a total value of £10,908.61. The VAT 407 did not describe the goods involved, but referred to invoices without quoting their serial numbers. The form VAT 407 was disallowed as evidence of export and the trader was assessed for £1,422.21 output tax. In his appeal, the trader produced invoices to support the Form VAT 407. These invoices were not accepted as supporting evidence, on the grounds that:

  1. the invoices did not identify the customer;
  2. the invoices appeared to run in sequential order even though the dates covered a 2 month period; and
  3. the goods were supplied in commercial quantities and, as such, were not eligible for relief under VAT retail export scheme. The VAT Act 1983, s16(7) (now The VAT Act 1994 s30(8)) allowed the supply of goods to be zero-rated subject to the Commissioners’ being satisfied as to the export of goods and compliance with the conditions imposed. In this case, the Tribunal decided that the trader had not met all the conditions, and therefore dismissed the appeal.

Advice required prior to assessment

If you have a problem with raising an assessment under the VAT retail export scheme, contact the Retail Unit of Expertise for assistance.

Tribunal Appeal

The VAT Supply Policy Team must be informed as soon as it appears that a case is likely to go to tribunal.