VAT: Things you should know about UK’s export evidence
HMRC does increased checks on businesses that exports goods and eyeing on the export evidence that serves as documentation. Businesses who sell goods abroad should review the export evidence that they have to avoid possible penalties and VAT liabilities.
Various conditions should be met to make exports as zero-rated such as time limits in which evidence has to be obtained within three months of export, otherwise it should be charged with normal VAT. Most exports from the UK requires an official or commercial evidence.
Official evidence can be obtained or provided by HMRC from their National Export or CHIEF systems. This system records the movement of goods either by land, air or sea. It also allows users to update their information electronically and validate the data entered and perform necessary risk assessments to enable safe release of goods. It is said to be a legal responsibility by the declarant, ensuring that goods are accurately declared to HMRC before sending them abroad. Though the information are available in their system already, HMRC advises businesses to print a copy of shipping confirmation as documentation.
On the other hand, commercial evidence is a documentation generated by the third party held as accountable for the export such as the shipping company or airlines. This might include sea or air waybills and consignment notes. These documents should show complete details regarding the transaction, including dates and signatures by the authorized personnel. This would secure the documentation of the movement of the goods and confirm that goods left from UK.
In most cases HMRC expects businesses to hold copies of supplementary evidence that links to the particular transaction. This might include order slip from the customer, sales invoice, insurance documentation and payment confirmation. They should be all consistent and has enough details such as:
Supplier’s name
Customer name
The goods
Accurate value
Destination
Mode of transportation
Export evidence should be kept for at least six years. If a business failed to provide this evidence to support zero-rated exports, VAT would be charged on a standard rate. HMRC would assess the said case and possibly charge the business penalties due to non-compliance. For further advice and more information, talk to us. Cheylesmore Accountants are happy to help!