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HMRC internal manual

VAT Single Market

Particular types of transaction: goods lost, destroyed or stolen in transit

Goods being removed from the UK

Goods that go missing before they have left the UK are liable to UK VAT unless the supplier holds evidence of loss, destruction or theft (for example through an insurance claim or police investigation). However, if they go missing after they have left the UK and the supplier holds satisfactory evidence of removal along with the VAT registration number of the intended customer, the supply may be zero-rated in the normal way.

Goods being sent to the UK

Goods that go missing before they arrive in the UK remain outside the scope of UK VAT. However, if the loss occurs after they arrive here the VAT treatment depends on who is responsible for transportation of the goods. This in turn determines whether they have been received by the UK customer. Goods collected and transported to the UK by the customer remain subject to acquisition VAT even if they subsequently go missing. But where the loss occurs prior to delivery in the UK by the supplier any liability to acquisition VAT transfers to the supplier as a potential transfer of own goods.

Treatment in other Member States

Goods that go missing en route to the Member State of destination, say in France whilst on their way to Italy, may be liable to VAT both in the Member State where the loss takes place and as an acquisition in the Member State of destination. The treatment may vary between Member States in which case those affected should confirm the position with the tax authorities in the Member State concerned. Contact details are available from the website mentioned at VATSM1100.