Proof of VAT on export

What this section covers

The evidence that is required for a supply of goods exported outside the UK or EU to be zero-rated for VAT you must produce either official evidence as described in 1.2 or commercial evidence as described in 1.3. Equal weight is put on official and commercial transport evidence but both must be supported by supplementary evidence to show that a transaction has taken place, and that the transaction relates to the goods physically exported.

Official evidence

Official evidence is produced by customs systems, for example, GDMs generated by NES. 

Commercial transport evidence

This describes the physical movement of the goods, for example:

  • authenticated sea waybills
  • authenticated air waybills
  • PIM/PIEX International consignment notes
  • master air waybills or bills of lading
  • certificates of shipment containing the full details of the consignment and how it left the UK or EU
  • International Consignment Note/Lettre de Voiture International (CMR) fully completed by the consignor, the haulier and the receiving consignee, or Freight Transport Association own account transport documents fully completed and signed by the receiving customer

Photocopy certificates of shipment are not normally acceptable as evidence of export, nor are photocopy bills of lading, sea waybills or air waybills (unless authenticated by the shipping or airline).

What supplementary evidence is available

You are likely to hold, within your accounting system some or all of the following:

  • customer’s order
  • sales contract
  • inter-company correspondence
  • copy of export sales invoice
  • advice note
  • consignment note
  • packing list
  • insurance and freight charges documentation
  • evidence of payment or evidence of the receipt of the goods abroad

You must hold sufficient evidence to prove that a transaction has taken place, though it will probably not be necessary for you to hold all of the items listed.

What must be shown on export evidence

Vague descriptions of goods, quantities or values are not acceptable. For instance, ‘various electrical goods’ must not be used when the correct description is ‘2000 mobile phones (Make ABC and Model Number XYZ2000)’. An accurate value, for example, £50,000 must be shown and not excluded or replaced by a lower or higher amount.

If the evidence is found to be unsatisfactory you as the supplier will become liable for the VAT due.

The next 7 bullets have the force of law.

The evidence you obtain as proof of export, whether official or commercial, or supporting must clearly identify:

  • the supplier
  • the consignor (where different from the supplier)
  • the customer
  • the goods
  • an accurate value
  • the export destination, and
  • the mode of transport and route of the export movement

Evidence you’ll need for VAT zero-rating if you do not arrange shipment of the goods

Typically this occurs when goods are supplied ex-works. If your overseas customer arranges for the goods to be collected from your premises and exported to a place outside the UK or EU member states it can be difficult for you, as the supplier, to obtain adequate proof of export as the carrier is contracted to your overseas customer. For this type of transaction, the standard of evidence required to substantiate VAT zero-rating is high.

Before zero-rating the supply and releasing the goods to your customer, you must confirm what evidence of export is to be provided.

You, the supplier, will become liable for payment of the VAT if the evidence of export:

  • does not show that the goods have left the UK or EU within the appropriate time limits
  • is found, upon examination, to be unsatisfactory

For these reasons you should consider whether to:

  • include the requirement for the buyer to provide export evidence as part of the sales contract between you and your customer
  • secure against the possibility that your buyer will fail to provide the proper export evidence by, for example, taking a deposit from your customer equal to the amount of VAT you will be liable to pay if the evidence is not sent to you

The deposit can be refunded when you obtain evidence that proves the goods were exported.

Evidence must show the goods you supplied have left the UK or EU. Copies of transport documents alone will not be sufficient. Information held must identify the date and route of the movement and the mode of transport involved. It should include the following:

How long to keep export documentation

To substantiate zero-rating a transaction you must make sure that the proof of export is:

  • kept for 6 years
  • made readily available to any visiting VAT officer to substantiate the zero-rating of your exports 

If you do not have the correct export evidence

If you do not hold the correct export evidence, within the appropriate time limits, then the goods supplied become subject to VAT at the appropriate UK rate.

Groupage or consolidation transactions

If you use a freight forwarder, consignments (often coming from several consignors) may be aggregated into one load, known as groupage or consolidation cargo. The freight forwarder must keep copies of the original bill of lading, sea waybill or air waybill, and all consignments in the load must be shown on the container or vehicle manifest. You will be issued with a certificate of shipment by the freight forwarder, often supported by an authenticated photocopy of the original bill of lading, a sea waybill or a house airwaybill. Where such consignments are being exported, the forwarder is usually shown as the consignor in the shipping documents.

Certificate of shipment

What information must be shown

Although the certificate of shipment can be in any format, it must be an original and will usually contain the following information:

  • the name and address of the issuing company
  • a unique reference number or issuer’s file reference
  • the name of the exporter (and VAT number, if known)
  • the place, port or airport of loading
  • the place, port or airport of shipment
  • the name of the export vessel or the aircraft, flight prefix and number
  • the date of sailing or flight
  • the customer’s name
  • the destination of the goods
  • a full description of the goods exported (including quantity, weight and value)
  • the number of packages
  • the exporter’s invoice number and date if known
  • the bill of lading or air waybill number (if applicable)
  • the identifying number of the vehicle, container or railway wagon

Exports that travel through EU member states

Where you send goods by road through EU member states (for example to Dover and across the EU before final export), or where you move goods from the UK to an airport in an EU member state before final export, this is an export through an EU member state. If you export to non-UK and non-EU countries via EU member states, you will require either official proof of export for VAT purposes or commercial transport evidence that the goods have left the EU to substantiate the zero-rating of the supplies.

Before zero-rating the supply and releasing the goods to your customer, you must confirm what evidence of export is to be provided

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