Supplies of most exported goods or removals from the UK can typically be zero-rated by the supplier if certain conditions are met. One criterion is that the goods must be exported or removed within specified time limits.
However, due to the issues that exporters face as a result of the Coronavirus crisis it may not be possible to export or remove the goods within prescribed time periods, which could result in a supplier becoming liable to account for VAT on the supply.
To help with this issue, HM Revenue & Customs (HMRC) has issued new guidance that explains the circumstances in which its officers can agree to additional time for the export or removal before any tax is collected.
HMRC has said that so far only a few supplies had been affected by Coronavirus, but it recognises that some intended exports or removals were delayed.
After a period of consideration, it has been agreed that it may permit those prevented from meeting the time limits due to the COVID-19 emergency to still export zero-rated supplies, provided the goods are exported or removed at the “earliest opportunity”.
The normal time limits are clearly defined in existing legislation, but HMRC has the discretion to permit non-observance of the conditions and time limits.
It is this discretion that HMRC will employ if the following conditions are met:
- It has not been possible to export or remove 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.)
- The goods have been/will be exported or removed at the earliest opportunity;
- All other conditions for zero-rating exports or removals are met.
Businesses have been advised to retain evidence that supports a case for the waiver as part of their business records.
For example, cancellation notes demonstrating that the transport a business intended to use did not take place or screenshots of Government rules preventing the export or removal of goods.
If there are extenuating circumstances that mean additional time is needed to export or remove the goods beyond that permitted by this authorisation then businesses should contact HMRC immediately.
HMRC has made it clear that this relaxation of existing rules surrounding exports is only temporary and arises from the conditions and difficulties resulting from COVID-19.
Business must account for VAT on exported goods if the circumstances prove to be different or any of the other conditions for the export zero-rate are not met.
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