Freight transport: Place of supply before 1 January 2010
The transport of goods within the UK is a supply in the UK. This is generally standard-rated, (but zero-rating applies to the UK element of a movement from within the UK to a place outside the EC, and vice versa - see the Transport Liability Manual VTRANS for details). Where the supply is of a domestic leg of an intra-EC freight movement see below.
Where domestic freight transport in the UK is provided by a supplier who belongs outside the UK and who is not UK VAT registered:
- the customer (if UK VAT registered) must account for any VAT due under the reverse charge procedure, otherwise
- if the customer is not registered for VAT, the supplier must register (subject to current turnover limits) and account for any VAT due.
“Intra-EC” means a movement that begins in one Member State and ends in another (even if via a third country), other than as part of a through movement to or from a place outside the EC. Intra-EC movements are covered in detail in VATPOSTR3500.
In the context of freight transport, “international” means movements from a country within the EC to a country outside the EC and vice versa. The place of supply of international transport is the country in which the transport takes place (Article 6 of the VAT (Place of Supply of Services) Order 1992). To the extent that it takes place within the UK, it is zero-rated under the VAT Act 1994, Schedule 8, Group 8, item 5. Similarly, no VAT is due when a UK trader transports goods through other EC Member States in the course of a journey to or from a country outside the EC. Such transport is outside the scope of UK VAT, and although within the scope of other Member State’s VAT regimes, it would normally be relieved from VAT in those countries. Certain ancillary services supplied in the UK in respect of goods being transported internationally are also zero-rated under items 6(b) and 11(a) of Group 8, and the related intermediary services under item 10. Guidance on the liability of freight transport and ancillary services can be found in the manual covering the liability of transport and in VAT Notice 744B (Freight transport and associated services).
EC leg following importation
If, after reaching their final destination, imported goods are subsequently transported to another Member State, this is treated as an intra-EC movement (VATPOSTR3500) and not part of an international journey.