How would VAT work if we are based in UK, manufacture in China and the ship straight to another country?

Question

How would VAT work if we are based in UK, manufacture in China and the ship straight to another country?

This question was asked during our VAT Fundamentals webinar. You can watch the webinar at http://opentoexport.com/info/webinars/#VAT_fundamentals

Answer

Hi

You don’t charge VAT on goods that are exported.
Whether that be in the triangular invoice format that you are talking about or whether they come from the UK either.
The only thing you should be aware of is that your chinese partner does charge a vat (different name) tax. That is because they are not raising an invoice to the consignee. You are. They cannot claim the vat back normally, so they may add it to the invoice to you.

Gilio Moscardini
http://www.exportadvisory.com/

Answer

For VAT purposes goods are supplied where they are located when the supply is made. The rules are explained in paragraph 4.8 of. VAT Notice 700: the VAT guide

When goods are located outside the UK when supplied, the supply is outside the scope of UK VAT and no UK VAT would be chargeable.

Where goods are supplied by a UK business in circumstances where the goods are sourced from a supplier outside the UK and delivered direct to a customer similarly located outside the UK, the involvement of the UK supplier, the issuing of invoices from the UK and receiving payment here, are all immaterial when it comes to fixing the place of supply. The supply is not deemed as a zero rated supply, it is simply outside the scope of VAT in the UK.

HM Revenue & Customs

Customs International Trade & Excise

www.hmrc.gov.uk/contactus

 

Answer

For VAT purposes goods are supplied where they are located when the supply is made. The rules are explained in paragraph 4.8 of. VAT Notice 700: the VAT guide

When goods are located outside the UK when supplied, the supply is outside the scope of UK VAT and no UK VAT would be chargeable.

Where goods are supplied by a UK business in circumstances where the goods are sourced from a supplier outside the UK and delivered direct to a customer similarly located outside the UK, the involvement of the UK supplier, the issuing of invoices from the UK and receiving payment here, are all immaterial when it comes to fixing the place of supply. The supply is not deemed as a zero rated supply, it is simply outside the scope of VAT in the UK.

HM Revenue & Customs

Customs International Trade & Excise

www.hmrc.gov.uk/contactus

 

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