Eels, salmon and trout are VAT free when sold dead or alive, but bream, perch, pike and tench are standard rated.
Tag Archives: zero-rate
VAT: New guidance on zero rating exports
HMRC has published updated guidance on the evidence required to zero rate the export of goods. VAT Notice 703 sets out the following changes on the documentation which is required for proof of export:
- Para 6.1 – For VAT zero rating purposes a business must produce official evidence or commercial evidence. Both types generally have equal weight but, if the commercial evidence is found to be lacking sufficient detail, a business will be expected to provide official evidence. An exporter must also provide supplementary evidence to show that a transaction has taken place, and that the transaction relates to the goods physically exported. If the evidence of export provided is found to be unsatisfactory, VAT zero rating will not be allowed and the supplier of the goods will be liable to account for the VAT at the appropriate UK rate.
- Para 6.5 – What must be shown on export evidence (extract from the Notice)
“An accurate description of the exported goods and quantities are required, for example ‘2000 mobile phones (Make ABC and Model Number XYZ2000), value £50,000’.
If the evidence is found to be unsatisfactory you as the supplier will become liable for the VAT due.
If you’ve described goods inaccurately on an export declaration you may be liable for a customs penalty.
The rest of this paragraph has 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
- an accurate and full description of the goods including quantities
- an accurate and consistent value of the good
- the export destination, and
- the mode of transport and route of the export movement
Vague descriptions of good, quantities or values are not acceptable. An accurate value must be shown and not excluded or replaced by a lower or higher amount”.
- Paras 7.3 and 7.4 on merchandise in baggage and direct exports of personal goods in accompanied baggage have also be amended.
Overview
It is vitally important that exporters obtain the correct evidence that goods have physically left the UK and that all descriptions of the goods are accurate and satisfy HMRC requirements. There has been a significant amount of case law on export documentation (an example here) which illustrates that this is often an area of dispute.
A VAT Did you know?
Embryos of animal species which are used for human food may be zero-rated but “anything below” the embryo stage is standard-rated.
VAT: DIY Housebuilders’ Scheme – deadline for claims extended
The DIY Housebuilders’ Scheme is a tax refund mechanism for people who build, or arrange to have built, a house they intend to live in. It also applies to converting commercial property into a house(s). This puts a person who constructs their own home on equal footing with commercial housebuilders. There is no need to be VAT registered in order to make the claim.
One of the main problems was the very strict (and rigorously enforced) deadline of three months for the submission of the claim form. This is from completion of the build (usually this is when the certificate of practical completion is issued) or the building is inhabited, although it can be earlier if the certificate is delayed.
A case on when a house is considered to be complete here.
However, HMRC has announced that this deadline will be extended to six months from a date yet to be announced. This extension is welcome as it is often difficult to collect all the required information and documentation. In addition, the whole process will be digitised some time in the future which will also simplify the process.
The Scheme can be complex, but here is our Top Ten Tips for claimants.
VAT: Food for assistance dogs now zero rated
VAT Quickie
Pet food is generally standard rated, however, food for “working dogs” is zero rated. Working dogs include animals such as; working sheep dogs, gun dogs and racing greyhounds. The definition in Public Notice 701/15 Animals And Animal Food has been amended at para 6.4 to now include assistance dogs from 28 February 2023.
Assistance dogs are trained to support disabled people and people with medical conditions in a variety of ways. From guide dogs to medical alert dogs, from autism dogs to hearing dogs.
NB: Although dog food held out as for sale for working dogs is zero rated, this excludes biscuit or meal – which remain standard rated regardless of use.
A VAT Did you know?
Girls Brigade officers’ dress hats are standard rated. Girls Brigade soft forage hats are zero-rated.
A VAT Did you know?
Children’s clothing made from the skin of goats is zero rated, but only if not made from Yemen, Mongolian or Tibetan goats.
VAT: Additional time for zero rating exported goods due to the coronavirus
COVID-19 Update
HMRC has published concessions in VEXP30310 relating to the conditions for the zero rating of exports.
Background
Most exports of goods from the UK are subject to zero rating. However, in order for VAT free treatment to apply, certain conditions must be met, otherwise 20% VAT applies to the sale. One of the conditions is that the goods must be exported within specified time limits.
Time limits
Generally, goods can be zero rated provided that:
- they are exported within 3 months of the time of supply, and;
- valid evidence of export is obtained within 3 months of the time of supply
COVID-19
During the pandemic, it may not be possible for businesses to export goods within the prescribed time. HMRC recognises that some intended exports have been delayed due to circumstances outside a business’ control. Therefore, the guidance sets out the circumstances in which HMRC may agree to additional time for the export before any tax is collected.
Additional time
The time limits for the export of goods from the UK are set out in legislation. However, HMRC has discretion to permit non-observance of the conditions and time limits for export of goods – VAT Act 1994, Section 30(10). HMRC has said that it will use its discretion to temporarily waive the prescribed time limits for export on a case by case basis. The goods must, however, have either already been exported or will be as soon as is reasonably practicable after the date a business is notified that HMRC is temporarily waiving the tax. An application for HMRC to waive the time limits must be made in writing.
Conditions
HMRC will permit a temporary waiver of time limits if the following conditions are met:
- it has not been possible to export goods within the prescribed time limit due to the COVID-19 emergency
Examples include:
- the UK or another Government has imposed restrictions on the movement of goods or people due to COVID-19 that prevent the goods being exported to the intended destination
- cancellation of the intended mode of transport for reasons directly related to COVID-19
- a participant in the export is ill due to COVID-19 and a substitute cannot be found
This list is not exhaustive.
2. the goods have been/will be exported or removed at the earliest opportunity
3. all other conditions for zero rating exports or removals are met – exporters’ responsibilities here
Expiry
Any waiver will expire
- one month after any government-imposed restrictions are lifted or
- one month after any COVID-19 impediment to the export or removal ceases, or
- there ceases to be an intention to export or remove the goods from the UK (Information on intention here)
whichever is the earlier.
If a business considers there are extenuating circumstances that mean additional time is needed to export goods beyond that permitted by the extension, it should contact HMRC setting out the details in full.
Evidence
A business must retain evidence that supports its case for the waiver (eg; cancellation notes demonstrating that the transport intended to use to take goods out of the UK did not take place, or screen shots of government rules preventing the export or removal of the goods).
Please contact us if you require any further advice or assistance.
VAT Notice 700/57 Administrative agreements with trade bodies – Update
HMRC has published an updated version of VAT Notice 700/57: Administrative agreements with trade bodies.
This is an unusual publication as it lists situations where there are, or can be, deviations from “normal” VAT rules.
The agreements in the Notice permit members of trade bodies to use procedures which take into account their individual circumstances so they may meet their obligations under VAT law. The agreements apply only to areas where HMRC can exercise discretion, and HMRC say that they convey no direct financial advantage or relief from the legal requirements of the tax. However, there can be benefits a business can derive from the arrangements, including, but not limited to; simplification, cashflow, compliance and management.
The agreements can provide unique solutions to particular problems and reduce the burdens on businesses. Some of them might usefully be applied by other businesses, but it should be born in mind that a business cannot adopt any special method based on these agreements unless HMRC has given approval in advance.
The trade bodies covered in the Notice are:
London Bullion Market Association
Brewers’ Society
Association of British Factors and Discounters
Finance Houses Association Ltd
Association of British Insurers
Association of Investment Trust Companies
British Printing Industries Federation
Marine, Aviation and Transport Insurance Underwriters
Association of British Insurers, Lloyd’s of London, the Institute of London Underwriters and British Insurance and Investment Association
National Caravan Council Limited and the British Holiday and Home Park Association Limited
Association of Unit Trust and Investment Managers
British Bankers’ Association
British Vehicle Rental and Leasing Association
Society of Motor Manufacturers and Traders
Gaming Board for Great Britain and the British Casino Association
British Phonographic Industry
Thoroughbred Breeders Association and the British Horseracing Board
Meat and Livestock Commission
Society of Motor Manufacturers and Traders Limited
Retail Motor Industry Federation
if you or your clients are involved in business covered by, or similar to, the above entities, it maybe worthwhile considering whether any specialised trade agreements may be of benefit.
VAT: zero rating of e-publications brought forward – to tomorrow
Further to the history of objection to reduce rating e-publications, and the 2020 budget announcement which stated that e-publications will be zero rated from 1 December 2020, the Chancellor of the Exchequer has today announced that this date is brought forward and zero rating will now apply from 1 May 2020 – which is of course tomorrow.
Further details of the measure here.
Zero rating
This brings electronically supplied sales in line with traditional printed matter. The zero rate will apply to:
- books
- booklets
- brochures
- pamphlets
- leaflets
- newspapers
- journals and periodicals (which include magazines)
- children’s picture and painting books
What supplied electronically means
The term ‘supplied electronically’ is not defined in legislation. It falls to be interpreted in accordance with its generally accepted meaning and includes supplies made over the internet and by e-mail.
Excluded items
Items that are not entitled to the VAT zero rate:
- Advertising
If more than half of an e-publication is devoted to advertising, audio or video content, its supply will remain standard rated for VAT purposes.
- Audiobooks
The zero rating extension only applies to the supply of electronic versions of books already zero rated in UK law. As such, zero-rating is limited to electronic versions of books that can be read or looked at. Supplies of audiobooks remain taxable at the standard rate whether supplied in a physical or digital format.
- Intellectual property
- e-book readers
e-book readers are one form of hardware to which e-books can be downloaded before being read but are not in themselves e-books. Therefore, supplies of e-book readers are standard rated
- Software
Software, eg: an app is used to access e-publications but is not in itself an e-publication. Therefore, supplies of such software are standard rated.
Lending of electronic publications
The lending of any of the zero rated e-publications for a charge (for example, by a library) is zero rated.
Summary
Although welcome, as zero rating is VAT nirvana, the short lead in time could catch out some business which make such online supplies. Businesses which provide e-publications may want to consider making a retrospective claim as a result of the News Corp case.