Import VAT relief for goods supplied onward to another country in the EC

HMRC Reference:Notice 702/7 (February 2013) 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 is the relevant law?

2. Onward supply relief (OSR)

2.1 Who is eligible use OSR?

2.2 Can an agent use OSR?

2.3 What are the conditions of OSR?

2.4 Other details required on Single Administrative Document (SAD)

2.5 What happens if you do not comply with the conditions of OSR?

3. How do you appeal against a decision?

Your rights and obligations

Do you have any comments or suggestions?

Putting things right

How we use your information

 

Foreword

This notice cancels and replaces Notice 702/7 (April 2010). Details of any changes to the previous version can be found in paragraph 1.2 of this notice.

Regulation 123 of the VAT Regulations 1995 gives the Commissioners power to impose conditions on the relief. Those conditions have the force of law. Where those conditions appear in this notice, they are placed in a box headed: 'the following text has the force of law'.

1. Introduction

1.1 What is this notice about?

This notice explains how VAT registered persons who import goods from outside the European Union (EU) may claim 'onward supply relief' or 'OSR' from the import VAT that would otherwise be chargeable.

1.2 What’s changed?

This notice has been changed to make it clearer that a VAT registered importer acting as agent in an onward supply must be 'acting in his own name' in relation to that supply. It has also been changed to address changes to the way VAT identification numbers are entered in box 44 of the import declaration.

1.3 Who should read this notice?

This notice is of interest to anyone who is or will be importing goods from outside the European Union (EU) (whether on their own behalf or on behalf of another person) in the course of a supply to a person in another EU country (or 'Member State'*).

*For a full list of Member States in the VAT territory of the Single Market see Notice 725, section 2.4

1.4 What is the relevant law?

  • Article 143 of Directive 2006/112/EC (the Principal VAT Directive).
  • Section 47 of the VAT Act 1994.
  • Regulation 123 of the VAT Regulations 1995.
  • Regulation 134 of the VAT Regulations 1995.

2. Onward supply relief (OSR)

2.1 Who is eligible use OSR?

A UK VAT registered person who imports goods then:

(a) makes an onward supply of those goods that is zero rated in accordance with Regulation 134 of the VAT Regulations 1995 (supplies to persons taxable in another member State), or

(b) acts as agent for a non taxable person in relation to an onward supply of those goods that is zero rated in accordance with Regulation 134 of the VAT Regulations 1995 provided that the agent 'acts in his own name' in relation to that supply.

The zero rating of supplies to persons taxable in another Member State is dealt with in Notice 725.

2.2 Can an agent use OSR?

Yes, they can, provided that:

(a) they are the importer of the goods (which they will be if they have submitted the import declaration in their own name), and

(b) they act in their own name in relation to the onward supply

An agent acts in his own name in the onward supply if he acts as though he were the vendor. We would not consider an agent to be acting in his own name if:

  • the contract for sale is between his principal and the purchaser, or
  • if the invoice for the purchase price is issued in the principal's name, or
  • if the agent represents to the buyer that he is acting, in the sale, on behalf of a named principal

Section 47 of the VAT Act 1994 applies in particular.

Note: An agent not fulfilling the above and acting purely as the freight forwarder would not meet the conditions of OSR, retrospective amendment of the Customs declaration at that point would not be possible. Such traders should have used an alternative system such as (but not restricted to) External Community Transit.

Prior to the use of any Customs procedures you must make sure that you meet all the conditions for actually submitting the Customs declaration as well as conditions applying subsequently.

2.3 What are the conditions of OSR?

The following text has the force of law


You must enter in box 44 of the import SAD:


  • your VAT identification number (beginning Y040GB if you are importing the goods on your own behalf and Y042GB if you are importing them as an agent for someone else)
  • if known, the expected place and date of onward consignment
  • if known, the particulars of the onward transport
  • the name, address and VAT identification number (including the Y041 prefix followed by the two digit country code) of the purchaser in the Member State of destination.

You must also:

(a) despatch the goods in the same state as they were when imported (without processing them in any way)

(b) remove the goods to another Member State within one month of the date of importation (which is the date on which they are released to free circulation). If you cannot meet this deadline, you can apply to the National Import Relief Unit (NIRU) for an extension (see below for contact details)

(c) complete EU sales lists and record EU trade figures in your VAT returns

(d) comply with all the obligations of a person making a zero rated supply (see Notice 725).

National Import Relief Unit
Abbey House
Head Street
Enniskillen
Co. Fermanagh
N. Ireland
BT74 7JL

Phone: 028 66344557
Fax: 028 66344571
Email: niru@hmrc.gsi.gov.uk

2.4 Other details required on Single Administrative Document (SAD)

Enter the appropriate Customs Procedure Code (CPC) in box 37

By using the CPC you are making a declaration that you:

  • have met the conditions of the relief at paragraphs 2.1 - 2.3
  • will produce, if asked by one of our officers, commercial evidence that the goods have been supplied onward to another EU country, and
  • will pay on demand any import charges due if the conditions of the relief are not met.

Although the law allows us to, we do not normally require you to provide security for VAT.

What are the CPCs?

The CPC applicable to your particular OSR importation (and the conditions that apply) can be found by referencing the:

Integrated Tariff of the United Kingdom, Volume 3, Appendix E2.

Note: When goods are imported make sure the correct import CPC is used. Failure to do so may result in OSR being refused.

2.5 What happens if you do not comply with the conditions of OSR?

If you do not comply with the OSR conditions we will normally issue a C18 demand for the Import VAT.

If you have to pay the import VAT, you may be able to reclaim it as input tax on your VAT return. However, Import VAT can only be recovered as input tax where the goods, on which the import VAT has been charged, are used in the making of taxable supplies. In practice this requires that the business makes the onward supply as principal or undisclosed agent. (Please see paragraphs 2.1 - 2.2).

For further details please refer to Notice 702.

3. How do you appeal against a decision?

If you do not agree with any decision issued to you there are three options available. Within 30 days of the date of the decision you can either:

  • send new information or arguments to the decision maker, or
  • request a review of the decision by someone not involved in making the disputed decision.

Your request must be in writing and should set out the reasons why you do not agree with the decision.

Please write to:

ECSM
Review and Appeals Team
7th Floor South West
Alexander House
21 Victoria Avenue
Essex
SS99 1AA,

Or, appeal direct to the Tribunal who are independent of HMRC.

If you opt to have your case reviewed you will still be able to appeal to the tribunal if you disagree with the outcome.

Further information relating to reviews and appeals is contained in leaflet HMRC1 which can be obtained from our website or by phoning 0845 900 0404.

Your rights and obligations

Your Charter explains what you can expect from us and what we can expect from you. For more information go to Your Charter.

Do you have any comments or suggestions?

If you have any comments or suggestions to make about this notice, please write to:

HM Revenue & Customs
OSR Policy Team
10th South West
Alexander House
21 Victoria Avenue
Southend-on-Sea
SS99 1AA

Please note this address is not for general enquiries.

For your general enquiries please phone our Helpline 0300 200 3700.

Putting things right

If you are unhappy with our service, please contact the person or office you have been dealing with. They will try to put things right. If you are still unhappy, they will tell you how to complain.

If you want to know more about making a complaint go to hmrc.gov.uk and under quick links, select Complaints and appeals.

How we use your information

HM Revenue & Customs is a Data Controller under the Data Protection Act 1998. We hold information for the purposes specified in our notification to the Information Commissioner, including the assessment and collection of tax and duties, the payment of benefits and the prevention and detection of crime, and may use this information for any of them.

We may get information about you from others, or we may give information to them. If we do, it will only be as the law permits to:

  • check the accuracy of information
  • prevent or detect crime
  • protect public funds.

We may check information we receive about you with what is already in our records. This can include information provided by you, as well as by others, such as other government departments or agencies and overseas tax and customs authorities. We will not give information to anyone outside HM Revenue & Customs unless the law permits us to do so. For more information go to hmrc.gov.uk and look for Data Protection Act within the Search facility.

Download options

This document is available in the following formats

Please be aware that our PDF, Word, Excel and Powerpoint documents will open in a new window.

Download free viewers for all formats >>

$START-DATA$ title=Import VAT relief for goods supplied onward to another country in the EC^ summary=VAT Notice 702/7: This notice explains the conditions to allow import VAT relief on goods imported for onward supply.^ doctype=PublicNotice^ date=19-Feb-2014^ author=lk125388^ $END-DATA$
content tools
FAQ's

See the VAT FAQs if you have any queries.

Glossary

Don't understand some of our terms ?

Find the answers in our Glossary