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Proof Of Export And VAT Refund Explained

Proof Of Export And VAT Refund Explained

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We have deemed it appropraite to explain to our customers how the issue of Proof of export and VAT(Value Added Tax) refund works here for goods bought and exported outside the UK. Usually  most goods purchased in the UK and scheduled for export is entitled for a VAT refund as long as the Proof of export can be sent back to the supplier . We will take a little time to explain different scenarios that a customer may face.

What is proof of export ? Proof of export(PoE) is a document showing that the goods in question has been exported out of the country, this document is usually in the form customs entry done by your freight forwarder or the supplier that sold you the goods if they have the capacity to ship and declare the goods in the customs system as exported. Proof of export is usually required due the following transactions;

1. A supplier has sold to the customer without charging VAT on trust that the customer will produce the proof of export once goods has been exported. The supplier needs this to prove to the tax authority in that country why VAT was not charged . In this case the supplier will ask for what they call a collections note from the customer's freight forwader and the collections note must state when the PoE will be sent back to the supplier for filing. The collection note must also contain all relevant information about the freight forwarder's business  and signed by the forwarder. If the freight forwader is not able to produce the PoE, the supplier has the right to charge the customer  the sum of the VAT not paid by the customer. So be careful of this , it is easy to forget a POE if the supplier does not chase for it.

2. A customer was charged VAT by the supplier and goods were exported out of the country but the customer would like to get the VAT paid on the exported goods back, remember that claiming VAT back for exported goods is usually a trade incentive to encourage export business by almost all countries, high exporting countries are usually better positioned economically than importing countries . In this case the freight forwarder will have to prepare the PoE and send back to the customer and the customer's supplier to be able to effect to the refund. The customer has about 3 months to do this in the UK but may differ in other countries.

Please note that if a supplier sends goods to UK address,  the supplier may not be able to zero rate the sale for VAT but if the customer collects directly or indirectly through a forwarder, then this is possible. This is where the term EX Works comes in which will be explained shortly below.

I am not a business customer , am i  entitled to a VAT refund ?

Yes, as long as the items billing and delivery address on the  invoice shows that the the item was bought for export purpose and the proof of export  can be provided by you or your shipper then the VAT paid on the items should be refunded by the supplier/seller back to you. Usually this is refunded electronically through bank transfer in order to maintain records for the tax man. It is very important that your supplier understands that the transaction will involve a VAT return. 

I am a business customer , am i entitled to a VAT refund ?

VAT refund generally favour all business customers, make sure your commercial invoice issued by the supplier has all that is needed for export declarations, commodity code (HS CODE) and goods description, invoice number etc.

My goods were exported in a cosolidation the Air Waybill does not specifically list my goods but general term was used to describe the whole lot , can i still get my VAT back?

Yes, as long as you are listed in the manifest and your forwarder declares your goods with the customs for export, you should be fine .

Can i claim VAT back if i bought and used the goods in the same  country even as a foriegn visitor ?

No, goods must be exported out of the country and proof of export produced before any VAT would be refunded.

What documents are needed for my supplier before i can have my VAT refunded?

Simply said, your proof of export in the form of Air Waybill, Bill Of Lading and customs declaration in the exporting country.


Ex works explained :

 To be continued ...........


Last modified on Monday, 21 November 2022 17:30

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