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HMRC internal manual

VAT Supplies in Warehouse and Fiscal Warehousing

Treatment of services associated with goods held within warehouses: Average throughput time for accounting for previously zero-rated services

Any VAT due on previously zero-rated services has to be accounted for when the goods to which the service relates are removed from the warehousing regime. However, commercial practices in certain warehousing regimes makes it difficult for some traders to accurately track specific goods and associated services. As a result they cannot say for certain which goods are removed.

In order to assist businesses, local officers can agree average throughput times for goods. Traders will then assume goods to have been removed from the regime by a certain date, at which time VAT becomes due.

Examples of when this arrangement may be used include:

  • where the services are performed on goods in bulk and the goods are then removed in smaller quantities;
  • when goods that have had a service performed on them are mixed with goods which have not.

These arrangements can apply in both customs and tax warehouses and we recommend that all such agreements should be formalised in writing and placed on Electronic Folder