UK VAT on exports: zero rating and proof of export (Notice 703)

Direct and indirect exports

In a direct export the UK supplier arranges the transport and sends the goods out of the UK. In an indirect export the overseas customer, or its agent, collects the goods from the supplier and arranges the export. Both can be zero rated if the conditions are met, but goods for the customer's own non-commercial use carried in accompanied baggage cannot be zero rated as an indirect export.

The time limit starts at the time of supply, which in most cases is the earlier of the date the goods are sent or taken away and the date full payment is received. Goods must normally leave the UK and evidence must be obtained within 3 months, or 6 months where the goods are first processed or incorporated into other goods.

What the evidence must show

• The supplier.
• The customer.
• An accurate, non-contradictory and full description of the goods, including quantities.
• A value consistent with the invoice.
• The export destination.
• The mode of transport and the route of the export movement.

Post, courier and ex works sales

For goods sent by post or courier, evidence depends on the service: a certificate of posting for letter post, customs declarations and collection receipts for parcels, and for couriers usually the air waybill number on the invoice or a track-and-trace confirmation. Replacement or photocopied evidence must be marked 'Duplicate evidence of export' and authenticated and dated by the issuing company.

Ex works sales are risky because the customer controls the export: if it does not send the evidence, the supplier still owes the VAT. HMRC suggests writing the evidence requirements into the sales contract and taking a deposit equal to the VAT that would be due.