Exporting a Range Cooker - VAT Refunds Explained
25/04/17 08:52 Filed in: Help & Advice
DISCLAIMER: The information set out below is a basic summary of our understanding of the VAT legislation and how it relates to the export of items out of the EU, and does not constitute tax advice. If in doubt, you should always contact Her Majesty's Revenue & Customs (HMRC) directly and receive a written determination if necessary. We cannot accept any liability for any errors or omissions.
Author: Fin O’Leary, Finance Director at Rangecookers.co.uk
It was Albert Einstein who once said: "The hardest thing to understand in the world is the income tax" - and he was correct, right up until 1973 when Value Added Tax (VAT) was introduced in the UK.
Here at Rangecookers we occasionally have customers who order from overseas, and the question of VAT and having it refunded is one of the main areas of confusion. We hope in this blog post to cover some of the main points to note, and shed some light on the topic. There are other areas to consider when taking a range cooker overseas (you can see our Overseas Delivery page for more information), but we'll be concentrating on VAT for this blog.
What is it VAT?
Broadly, it is a tax based on the value added to goods and services sold by UK businesses to be used/consumed within the EU.
Do I have to pay it?
Unfortunately yes*. To use my second quote of the blog, as Benjamin Franklin once said: "Nothing is certain except death and taxes."
*Although in certain cases you 'pay' it at 0% (zero rated). Even though there's no material difference between not paying it and paying it at 0%, in the legislation these are two different things. I told you Einstein was wrong.
OK, so when can a sale be zero rated?
Broadly, a sale can be zero rated when the item(s) are exported** outside the EU, subject to certain criteria being met.
We here at Rangecookers can only arrange deliveries to UK addresses (such as a courier company), so the export is arranged by you, the customer, and is therefore defined in the VAT legislation as an 'indirect export'.
In practice, this means that the criteria for zero rating are stricter, and as a result, we always charge VAT at the standard rate at the point of sale regardless of your location. We can only zero rate a sale and issue a VAT refund once the item has been exported, subject to certain criteria being met.
**Fun fact: when an item is transferred from the UK to outside of the EU it is an export, if it is from the UK to a country in the EU it is a dispatch/removal. This is a great anecdote for dinner parties, first dates or ghastly corporate training days where they insist you introduce yourself and give one interesting fact.
So, what are the criteria you keep mentioning?
To be eligible for a VAT refund:
• You must be an overseas customer (a person or company NOT resident in the EU).
• You must export your range from the EU within 3 months of the
• You must provide valid official or commercial evidence of export (that is sufficiently detailed - see below) within 3 months of the tax point.
The tax point in this instance is the date you purchase it from us. It is therefore worth noting that in some cases a cooker can take several weeks to be built and delivered, and that this delay
could cause you to exceed this 3 month time limit- especially if your courier then waits to consolidate your cooker into a larger export.
Here is where it can get tricky. Basically, we need to hold sufficient evidence that the item(s) have been exported to satisfy HMRC.
The principal document for this is usually an Airway Bill or Bill of Lading. The idea is that these list what has been exported, its value, its weight, who it is from and to whom it is being sent. However, in practice it is often the case that instead of a specific description such as: 'Rangecookers Select 90 DF cooker (Stainless Steel)', the courier will list 'Household items' or 'Personal effects' instead. This is particularly the case where your cooker is being consolidated into a larger shipping container, and is NOT specific enough for VAT refund purposes.
In other instances, there may be no mention of us (Rangecookers) or indeed of you, our customer, on any of the shipping documents. In effect we are then left in the situation where we do not have sufficient evidence of export, and we cannot refund your VAT.
What steps can I take to increase the chances of a successful refund?
We would advise that from the very first conversation you have with your courier you should stress that there will be a date by which your item(s) must be exported. Depending on the brand you've ordered, we can advise a typical lead time to help you agree a date for export with your courier.
In addition, we recommend clearly setting out the information you require to be printed on your shipping documents:
• The supplier (us, Rangecookers)
• The item(s) you have ordered (details can be taken from your order confirmation from us, e.g. Rangecookers Select 90DF...)
• The value.
• The export destination.
• The mode of transport and route.
• Container Number.
Finally, once you receive them, you should forward them to us immediately. Remember that the 3 month deadline also applies to us receiving this evidence.
Can you arrange all this for me?
Unfortunately, no. Whilst we are always happy to help and provide advice (indeed, please call us if you're unsure) we cannot arrange the export for you. It's important to be aware that the act of exporting your item(s) is your responsibility, and that you are aware of all the potential risks and complications.
Can you not be flexible on this?
Sadly, no. The deadline and the criteria for evidence are set by HMRC.
I live in the EU but I'm purchasing through an EU VAT registered company...
Subject to the 3 month deadline and evidence requirements mentioned above, we will be able to issue a zero rated Intra-EU invoice once we have your VIES verified EU VAT number. Please call us.
I'm suffering from chronic insomnia, can you help?
Absolutely, have a read through VAT Notice 703 which covers exports from the UK.