| HMRC Reference:Notice 703/1 (February 2010) | View Change History |
1.1 What is this notice about?
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
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
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
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
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.
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).
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 0845 010 9000.
Anyone selling, leasing or hiring out freight containers for removal to another EC Member State or export from the EC.
The legal basis for these arrangements is contained in:
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: |
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 |
For VAT purposes, a container is an article of transport equipment (lift-van, moveable tank or other similar structure):
The term ‘container’ includes:
But not:
This section should be read in conjunction with Notice 703 Export of goods from the United Kingdom.
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.
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:
- 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;
|
The above conditions, where met, allow a chain of supplies to be zero-rated.
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:
|
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:
|
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.
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.
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). |
You treat the supply as being made in your customer’s country and so will not charge UK VAT on the supply.
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.
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.)
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.
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).
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).
*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.
Go to www.hmrc.gov.uk.
Phone 0845 010 9000 Monday to Friday 08.00 to 20.00.
Os hoffech siarad â rhywun yn Gymraeg, ffoniwch 0845 010 0300, Llun i Gwener 08.00 i 18.00.
If you are hard of hearing or speech impaired and use a Textphone, phone 0845 000 0200.
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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Supply of freight containers for export or removal from the United Kingdom (Acrobat PDF, 71KB) 
