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HMRC internal manual

VAT Transport

HM Revenue & Customs
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Zero-rating of international freight transport: Transport of goods

You must read this guidance in conjunction with the place of supply rules published in VATPOSS and VATPOSTR.

Additional detailed guidance can be found in Notice 744B

When goods are transported from a place within to a place outside the EC (and vice-versa), and the place of supply of the transportation is the UK it maybe zero-rated under Group 8, item 5. In the case of imported goods zero-rating applies whether or not the value of the transport has been included in the value of the goods at importation.

Zero-rating applies:

  • where goods are transported to or from a place outside the EC; and
  • the UK or other Member State;
  • this includes legs that comprising a longer journey that fullfills the above criteria,

A supplier of such services must hold documentary evidence to show that his service forms part of such an EC import or export journey - see Notice 744B.

Movements of goods wholly outside the EC

Prior to the changes to the place of supply of services on 1 January 2010 the transport of goods between two places outside the EC was outside the scope of UK and EC VAT. However from that date where the place of supply of such a movement becomes a UK place of supply there is no zero-rating relief within UK legislation and the supply becomes a standard rate supply.

Trade representatives have highlighted this anomaly but have not provided any hard evidence that it is a real problem. Evidence of cases, with full details and values, of supplies that were hitherto outside the scope of UK VAT but became Standard rated should be forwarded to Supply Policy Team.

Movement of goods between member states

Goods are transported between the UK and another EC Member State or between EC Member States with a place of supply in the UK cannot be zero-rated unless they form part of a longer import or export movement.

However for movements involve The Azores or Madeira see VTRANS100000 

Freight Forwarders

Freight forwarders are specialised hauliers who provide a wide range of services in the field of transport and handling of international freight. There are no special rules relating to the VAT treatment of supplies by freight forwarders, and they will vary in respect of their position as agents/principals, and the place and nature of their supplies. The place of supply of freight forwarding follows the rules set out in VATPOSTR and the liability of supplies of freight transport and related services supplied by freight forwarders is decided by the rules in this book.