Supply of freight containers for export or removal from the United Kingdom

HMRC Reference:Notice 703/1 (February 2010) View Change History
 

Contents

Foreword

1. Introduction

1.1 What is this notice about?

1.2 What’s changed?

1.3 Who should read this notice?

1.4 What law covers this notice?

1.5 What is the legal status of this notice?

2. Containers, their supply and liability

2.1 Liability of supply of containers

2.2 Definition of 'container'

3. The sale of containers for export out of the EC

3.1 Conditions for zero-rating the sale of a container for direct export

3.2 Conditions for zero-rating the sale of a container in the UK for indirect export from the EC

3.3 Records you need to keep if you are supplied with a zero-rated container for export

4. Conditions for zero-rating the sale of containers to VAT registered customers in other Member States

5. Lease (or hire) of containers

5.1 Where both you and your customer belong in the UK

5.2 Where your customer belongs outside the territory of the EC

5.3 Where your customer belongs in another EC Member State

5.4 Where you lease a container from an overseas company

5.5 Liability of incidental charges

6. Temporary movements of containers to other EC Member States

7. Repairs to containers

8. Fiscal (VAT) territory of the European Community

8.1 Countries and territories within the EC for VAT purposes

8.2 Countries and territories outside the EC for VAT purposes

If you have a question about VAT, Excise or Customs duty

Putting things right

 

Foreword

This notice cancels and replaces Notice 703/1 (January 2004). Details of any changes to the previous version can be found in paragraph 1.2 of this notice.

1. Introduction

1.1 What is this notice about?

This notice explains the special VAT arrangements under which you can zero-rate the supply by way of sale, lease or hire of freight containers for export to a place outside the European Community (EC) or for removal to another EC Member State.

It does not cover other supplies related to freight containers - for example, management charges - which are subject to VAT under the normal rules (see Notice 700 The VAT Guide).

1.2 What’s changed?

This notice has been updated and restructured but does not introduce any new rules or procedures.

You can access details of any changes to this notice since January 2010 on our website, go to www.hmrc.gov.uk or phone the VAT Helpline on 0300 200 3700.

1.3 Who should read this notice?

Anyone selling, leasing or hiring out freight containers for removal to another EC Member State or export from the EC.

1.4 What law covers this notice?

The legal basis for these arrangements is contained in:

  • The VAT Act 1994, Sections 30(6) and 30(8), and
  • The VAT Regulations 1995 (SI 1995/2518) regulations 117(2), 128 and 134.

1.5 What is the legal status of this notice?

Under United Kingdom (UK) VAT law, HM Revenue & Customs may specify conditions to prevent evasion, avoidance or abuse. This notice lays down the conditions, which must be met in full, for supplies of containers to be zero-rated.

Parts of this notice have the force of law these paragraphs are indicated by being placed in a box.

Example:

The following requirement has the force of law


To zero-rate the sale of a freight container for indirect export, you must obtain a written undertaking from your customer that:


2. Containers, their supply and liability

2.1 Liability of supply of containers

The supply of containers in the UK is, in principle, taxable at the standard-rate. The supply of containers for export from the EC or for removal to another EC Member State may be zero-rated provided that the conditions set out in this notice are met. See:

Paragraph


Subject


3.1


Direct exports


3.2


Indirect exports


4


Removals to other Member States


5


Lease or hire


6


Temporary movements


7


Repairs


2.2 Definition of 'container'

For VAT purposes, a container is an article of transport equipment (lift-van, moveable tank or other similar structure):

  • fully or partially enclosed to constitute a compartment intended for containing goods
  • of a permanent character and accordingly strong enough to be suitable for repeated use
  • specially designed to facilitate the carriage of goods, by one or more means of transport, without intermediate reloading
  • designed for ready handling, particularly when being transferred from one mode of transport to another
  • designed to be easy to fill and to empty, and
  • having an internal volume of 1 cubic metre or more.

The term ‘container’ includes:

  • the accessories and equipment of the container, appropriate for the type concerned, provided that such accessories and equipment are carried with the container. The term ‘container’ shall not include vehicles, accessories or spare parts of vehicles, or packaging, and
  • air transport containers whatever their internal volume, and
  • ‘flats’ or ‘Lancashire flats’ (bases with or without head and tail boards, which are designed to carry goods and have the floor area of a 20ft or 40ft container), although not strictly covered by this definition we treat them in the same way.

But not:

  • pallets, road vehicles and trailers including those with fixed tanks. These are not covered by this notice.

3. The sale of containers for export out of the EC

This section should be read in conjunction with Notice 703 Export of goods from the United Kingdom.

3.1 Conditions for zero-rating the sale of a container for direct export

For VAT purposes a direct export occurs when the supplier of the container sends it outside the EC and is responsible either for arranging the transport, or for appointing a freight agent.

Supplies of freight containers for direct export may be zero-rated provided the conditions set out in Notice 703 are met.

3.2 Conditions for zero-rating the sale of a container in the UK for indirect export from the EC

For VAT purposes, an indirect export occurs when an overseas customer or their agent collects, or arranges for the collection of the container from the supplier and then exports it outside the EC.

The following requirement has the force of law


To zero-rate the sale of a freight container for indirect export, you must obtain a written undertaking from your customer that:


  • the container will be exported from the EC, and
  • will not be used within the EC except for:

    - a single domestic journey before export of the container, on which inland freight may be carried between two points within the UK. This is allowable only if the route brings the container reasonably directly from the point of supply to the place where it is to be loaded with export cargo or exported;

    - international movements of goods, which may include a journey within the UK for the purpose of loading or unloading the goods;
  • records accounting for the use of the container will be maintained, as specified in paragraph 3.3.

The above conditions, where met, allow a chain of supplies to be zero-rated.

3.3 Records you need to keep if you are supplied with a zero-rated container for export

The following requirement has the force of law


If you are supplied with a zero-rated container you must keep sufficient records to satisfy HM Revenue & Customs that:


  • the container has not been used in the EC (except as allowed under paragraph 3.2)
  • it has been exported, or
  • you have sold or leased it to someone else and have obtained the undertaking referred to in paragraph 3.2.

4. Conditions for zero-rating the sale of containers to VAT registered customers in other Member States

This section should be read in conjunction with Notice 725 The Single Market.

The following requirement has the force of law


The supply of a container for removal to another EC Member State is zero-rated provided that all the following conditions are met:


  • you obtain your EC customer’s VAT registration number (with a 2- digit country code prefix) which you must show on your VAT invoice
  • the container is sent from the UK to a destination in another EC Member State, and
  • within three months of the date of supply, you obtain and hold valid commercial documentary evidence that the container has been removed from the UK. Examples of acceptable evidence are listed in Notice 725 The Single Market.

If your customer is not registered for VAT in another EC Member State, or all of the above conditions are not met, you cannot zero-rate your supply and you must account for tax on the container in the UK.

If your EC customer collects or arranges for the collection of the container and its removal from the UK, you should confirm with your customer how the container is to be removed, and what evidence of removal will be available to you. You may also wish to consider taking a deposit from your customer (equal to the amount of VAT you will have to account for if the conditions for zero-rating are not met) if you believe you will not be able to obtain evidence of the type listed in Notice 725.

5. Lease (or hire) of containers

In working out the liability of these supplies, you will need to refer to the rules set out in Notice 741A Place of supply of services. The place of supply of such services will depend upon the place of belonging of the supplier and the customer.

Note: ‘Lease’ should be taken to also mean ‘hire’ for the purposes of this notice.

5.1 Where both you and your customer belong in the UK

You must treat the supply as being made in the UK and must charge VAT on it. Your customer may then recover input tax subject to the normal rules (see Notice 700 The VAT Guide).

The following requirement has the force of law


However, if your customer is to export the container from the EC, you may zero-rate the lease of the container provided that you, as the supplier, obtain from your customer a written undertaking (as set out in paragraph 3.2).


5.2 Where your customer belongs outside the territory of the EC

You treat the supply as being made in your customer’s country and so will not charge UK VAT on the supply.

5.3 Where your customer belongs in another EC Member State

Where your customer is in business in another EC Member State, the supply is treated as being made in your customer’s country, and so you will not have to charge UK VAT. Your customer will normally have to account for VAT in accordance with the ‘reverse charge’ procedure as explained in Notice 741A Place of supply of services. If your customer in another Member State is a private individual then the place of supply is where you belong and you will have to charge UK VAT.

Note: For Intrastat purposes, leases lasting over two years are considered as a supply of goods, and a supplementary declaration is required. Notice 60 Intrastat General Guide has more information.

5.4 Where you lease a container from an overseas company

If you, as a UK business, lease containers from companies outside the UK, you will normally account for tax under the ‘reverse charge’ procedure. (See Notice 741A Place of supply of services.)

5.5 Liability of incidental charges

Where under the terms of a lease agreement, the costs of incidental services are charged to the lessee, these costs are regarded as part of the consideration for the leasing of the container. This includes items described as repair, delivery, regulator and handling charges, extra rental, or a charge for an option to terminate the lease at an earlier date. The liability of the incidental services will be the same as the liability of the leasing of the container.

6. Temporary movements of containers to other EC Member States

The temporary movement of containers from the UK to other Member States (whether involved in transporting goods or where the container is on lease or hire to other customers) is not treated as a removal from the UK with a subsequent acquisition in the destination Member State.

However, you will need to retain commercial evidence that the containers have left the UK and have later returned. In the case of a temporary movement of a container, you will need to make an entry in your Register of Temporary Movements. (See Notice 725).

7. Repairs to containers

See Notice 741A for full information on this subject.

You may be able to zero-rate work (such as repairs) on a container if:

a. your customer is an overseas business, or

b. the container is exported to a place outside the territory of the EC.

Containers temporarily imported from outside the territory of the EC solely for repair etc. may be eligible for relief from payment of import VAT (see Notice 702 Imports).

8. Fiscal (VAT) territory of the European Community

8.1 Countries and territories within the EC for VAT purposes

  • Austria
  • Belgium
  • Bulgaria
  • Cyprus*
  • Czech Republic
  • Denmark, excluding the Faroe Islands and Greenland
  • Estonia
  • Finland
  • France including Monaco
  • Germany, except Busingen and the Isle of Heligoland
  • Greece
  • Hungary
  • The Republic of Ireland
  • Italy, except the communes of Livigno and Campione d’Italia and the Italian waters of Lake Lugano
  • Latvia
  • Lithuania
  • Luxembourg
  • Malta
  • The Netherlands
  • Poland
  • Portugal, including the Azores and Madeira
  • Romania
  • Slovakia
  • Slovenia
  • Spain, including the Balearic Islands, but excluding, Ceuta and Melilla
  • Sweden
  • United Kingdom and the Isle of Man.

*excluding the United Nations buffer zone and the part of Cyprus to the north of the buffer zone, where the Republic of Cyprus does not exercise effective control.

8.2 Countries and territories outside the EC for VAT purposes

  • Andorra
  • Channel Islands
  • Gibraltar
  • Mount Athos
  • San Marino
  • The Åland Islands
  • The Canary Islands
  • The overseas departments of France (Guadeloupe, Martinique, Reunion, St Pierre and Miquelon, and French Guiana), and
  • The Vatican City.
  • All other countries which do not appear in paragraph 8.1.

If you have a question about VAT, Excise or Customs duty

Go to www.hmrc.gov.uk.

Phone 0300 200 3700 Monday to Friday 08.00 to 20.00.

Os hoffech siarad â rhywun yn Gymraeg, ffoniwch 0300 200 3705, Llun i Gwener 08.00 i 18.00.

If you are hard of hearing or speech impaired and use a Textphone, phone 0300 200 3719.

Putting things right

If you are not satisfied with our service, please let the person dealing with your affairs know what is wrong. We will work as quickly as possible to put things right and settle your complaint. If you are still unhappy, ask for your complaint to be referred to the Complaints Manager.

For more information about our complaints procedures go to www.hmrc.gov.uk and under ‘quick links’ select ‘Complaints’.

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$START-DATA$ title=Supply of freight containers for export or removal from the United Kingdom^ summary=VAT Notice 703/1: This is beneficial if you are a VAT trader wishing to take advantage of zero rating a supply upon export or removal.^ doctype=PublicNotice^ date=19-Feb-2014^ author=lk125388^ $END-DATA$
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