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VAT on imports and exports

If your business buys or sells goods or services internationally, you will need to understand the VAT implications.

The VAT treatment depends on factors such as:

  • whether you are buying or selling goods or services
  • where your customer or supplier is located
  • whether goods are being imported into or exported from the UK
  • the place of supply for VAT purposes.

This guide explains the main VAT rules for UK businesses trading with customers and suppliers overseas.

What are imports and how are they treated for VAT purposes?

Imports are goods or services purchased from overseas suppliers.

Goods

When goods are imported into the UK, import VAT may be due. This can be accounted for using Postponed VAT Accounting (PVA), which allows import VAT to be declared and recovered through the VAT Return rather than paid at the border.

Where import VAT is recoverable, you can normally reclaim it as input VAT, provided you have appropriate import documentation, such as a postponed import VAT statement or C79 certificate.

Services

Special VAT rules apply when you use services provided by overseas suppliers.

In many business-to-business transactions, you as a UK customer, must account for VAT using the reverse charge procedure. This means you records both output VAT and input VAT on the same VAT Return, subject to the normal VAT recovery rules.

The exact treatment depends on the type of service and the place of supply rules.

What are exports and how are they treated for VAT purposes?

Exports are goods or services supplied by a UK business to customers overseas.

Goods

Goods exported from the UK can usually be zero-rated for VAT purposes, provided the relevant conditions are met.

To apply zero rating, you must retain evidence that the goods have left the UK and keep appropriate business records.

Services

The VAT treatment of services supplied to overseas customers depends on the place of supply rules.

In many cases, services supplied to overseas business customers are outside the scope of UK VAT. However, the treatment varies depending on the type of service and the location of the customer.

Before treating a service as outside the scope of UK VAT, you should check the relevant place of supply rules.

 

Do I need to include imports and exports on the VAT return?

Yes. If your business imports or exports goods, or buys or sells services internationally, the transactions may affect the figures reported on your VAT Return.

Most accounting software will calculate the relevant VAT Return entries automatically, but it is important to ensure that:

  • imported goods have been treated correctly
  • any import VAT has been accounted for or reclaimed correctly
  • exports have been recorded using the appropriate VAT treatment
  • any reverse charge transactions have been included where required
  • supporting documentation has been retained.

International transactions can be more complex than domestic sales and purchases, so you should review the VAT treatment carefully before submitting your VAT Return.

In addition to your VAT Return, HMRC may require other customs or trade documentation depending on the nature of the goods being imported or exported.