Retail export scheme (until 31 December 2020)

Produced by Tolley
Retail export scheme (until 31 December 2020)

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

  • Retail export scheme (until 31 December 2020)
  • Background
  • Conditions for using the scheme
  • Condition 1
  • Condition 2
  • Condition 3
  • Condition 4
  • Condition 5
  • Condition 6
  • Procedure for dealing with a retail export
  • More...

Background

The Government announced (see Abolition of retail export scheme in Great Britain) on 11 September 2020 that the retail export scheme would be abolished in Great Britain (but not Northern Ireland) with effect from 1 January 2021. From that date, therefore, the arrangements described below will only be relevant to travellers leaving the UK via Northern Ireland.

This guidance note provides an overview of the zero-rated provisions applicable to goods sold by VAT registered retailers to eligible people resident outside of the UK for personal use and exported as accompanied baggage. In particular, it sets out the conditions that must be complied with by retailers and customers entitled to use the VAT retail export scheme. The VAT retail export scheme provides overseas visitors coming to the UK with the opportunity to receive a refund of VAT paid on goods they buy in shops, as long as the goods are exported to destinations outside the EU.

The onus is on the retailer to ensure that export evidence is held to support zero-rating of the goods. If this evidence is missing or unacceptable, then HMRC will treat the goods as being supplied in the UK and the retailer will be issued with an assessment for the VAT under-declared plus interest and a penalty if applicable.

In order to qualify to use the scheme, the overseas customer must leave the UK for a final destination outside the EU (with the goods in question) by the last day of the third month following that in which the goods were purchased.

The retail export scheme is optional for a retailer. However, it gives two main advantages:

  1. reduced prices for eligible customers who can buy goods on a VAT free basis may make more expensive items attractive to overseas visitors

  2. customer satisfaction ― the business may attract more overseas customers if it adopts the retail export scheme

See Example 1.

HMRC do not set a minimum sales value for goods supplied under this scheme, however,

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