What are the VAT considerations for imports and exports businesses?
Post Brexit, all goods that move into or out of Great Britain are imports or exports and there is a distinction between Great Britain and the United Kingdom, as the latter includes Northern Ireland which has special status.
To import goods into the UK, you need an Economic Operators Registration and Identification number (EORI) which, if you are VAT registered, will be the same as your VAT number with a few extra digits. However, you have to apply for an EORI number as it is not automatically generated when you register for VAT.
Quoting your EORI number on import documents will allow you to clear your goods into the UK either by paying import VAT and reclaiming it through your VAT return or the more popular Postponed Import VAT Accounting procedure which allows you to clear your goods without paying VAT and then account for the VAT on your VAT return. For fully taxable businesses this means no VAT payable as you will both pay and reclaim the amount simultaneously.
You may also have an EU EORI number if you import goods into an EU country from Great Britain or the rest of the world (ROW).
It is important to note that only the importer of record is entitled to reclaim import VAT, supported by the Customs import documents. Freight forwarders and agents are not entitled to claim on their clients’ behalf.
Exports of goods from the UK are VAT zero rated, provided that proper export documentation is held to evidence the goods leaving the UK. VAT or an equivalent tax is then payable where the goods arrive and so it is important to establish where ownership of the goods transfers and who is responsible for paying import VAT. Understanding the different incoterms under which you trade is important for this.
Direct exports where you take responsibility for moving the goods to the port of export are relatively simple to evidence but where your customer collects the goods from you to onward export them, you need to know whether your customer has an establishment in the UK as UK VAT will then be payable, irrespective of the customer’s intention to export the goods.
You must be registered for the Customs Declaration Service and authorise your agent if you wish to import or export goods.
What are the potential benefits of discussing VAT?
For businesses entering the import or export market, it is about understanding the rules and the pitfalls before you fall into them and find your goods held up due to incorrect documentation.
Moving goods from the UK to the EU and within the EU can be burdensome, not least because some EU Member States will not allow UK businesses to register for VAT to clear their own goods.
Supported by a Customs specialist and advisers across the EU we can help with solutions to these barriers to trade.
For established import and export businesses, a VAT review to check that your processes are compliant with VAT law can give you peace of mind that you need not worry if a VAT compliance inspection or enquiry arises.
What types of businesses may benefit from discussing VAT?
Whether you are a regular importer or exporter, an occasional one or considering expanding your business into other jurisdictions, we can help.
What is our experience of working with import and export businesses?
Many of our existing clients import and export goods, both within the EU and ROW.
We work with import and export manufacturing businesses, wholesalers and retailers and have particular specialisms within the pharmaceuticals, food and drink sectors.
Some of our clients have establishments in multiple countries whilst some operate from a single establishment with appointed agents or fiscal representatives in other jurisdictions. Through our membership of AGN we have access to advisers in 70 countries.
