Exporting goods VAT free to Iran

Question

Hello,

We are a UK based retailer and have been approached an Iranian lady who lives in the UK. The lady would like to complete the purchase of goods on behalf of her brother who lives in Iran and transport the goods in person to her brother’s home address.

The question of reclaiming the VAT content was raised. As far as I understand, unless the brother is visiting the UK in person and completes the transaction in our showroom, he will not be eligible to a VAT refund.

The gentleman is reluctant for the goods to be sent by international freight service, due to a previous experience of the goods being mishandled by the local authorities.

I would appreciate any assistance regarding my question.

Yours sincerely,

Simon

Answer

You are in a difficult position here to justify treating this sale as a zero rated export as the proposed options do not meet the conditions set out for retail exports as a third party purchaser, that is UK resident would not qualify as the “overseas visitor”.

You could treat it as an export if you were to ship the goods and retain appropriate evidence. Postal items evidence is as set out in Notice 703 para 7.5 if its less than 2 kgs or more than 2 kg if these are smaller items.

Proof that the goods have been exported when support zero rating but clearly that involves a commercial delivery agent of some description.

HMRC are very vigilant on export evidence to validate your zero rating of sales.

Liz Maher Centurion VAT Specialists

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