EU ― acceptable evidence of removal (until 31 December 2020)

Produced by Tolley
EU ― acceptable evidence of removal (until 31 December 2020)

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • EU ― acceptable evidence of removal (until 31 December 2020)
  • What sort of evidence can be used (position from 1 January 2020)?
  • Practical implications
  • What sort of evidence can be used (position prior to 1 January 2020)?
  • What information must be included on the evidence?
  • Evidence for removals from Northern Ireland to the Republic of Ireland
  • Evidence required if the customer collects the goods to be removed
  • Postal and couriers
  • Record retention period

This note applies to transactions whilst the Great Britain was a member of the EU and during the transition period that ended on 31 December 2020. For information on Northern Ireland see the Northern Ireland topic. It is extremely important that a business obtains and keeps acceptable evidence that the goods have been removed from the UK to another EU member state. If a business zero-rates a sale as an intra-EU dispatch and does not have proper evidence that the goods have been removed, HMRC will issue an assessment for the VAT due on the sale, plus interest and possibly penalties.

From a commercial perspective, if the business zero-rates the sale and does not get the necessary evidence, it is going to be difficult to persuade the customer to pay the VAT due on the transaction. If the business cannot recover the VAT due from the customer, it will need to treat the amount received from the customer as VAT inclusive and pay this VAT amount to HMRC. This will reduce the amount due to the business which could be detrimental to the business. Belatedly requesting VAT from a customer can also have a very damaging impact on the business’ relationship with the customer, even if the customer pays the VAT due.

If the customer is arranging shipment of the goods, it may be prudent for the supplier to request that the customer pays a deposit of the amount of VAT that would be due on the sale. The business can refund the amount if acceptable evidence is provided. Requesting a deposit is more likely to make the customer supply the evidence on a more timely basis as they have a financial incentive to do so.

Please see VEXP70300 for access to a number of VAT decisions regarding what evidence of removal is acceptable for zero rating. Businesses may also wish to study the CJEU decision in Teleos plc where the court stated that if the

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