OVERSEAS GOODS - 09.04.2020

VAT on goods that never come to the UK?

Q. Our business purchased some goods in Turkey from a Turkish supplier. Before the goods left the country, we sold them to a UK business in Manchester that has a warehouse in Turkey. Should we charge VAT on our sales invoice to the UK business as a domestic supply?

A. There are no UK VAT issues here because the goods never arrive in or leave the UK. The fact that you are invoicing a UK business for the sale is irrelevant. It is all about the movement of the goods. The sale is outside the scope of UK VAT but it is still recorded in Box 6 (outputs) of your relevant VAT return.

Tip. In this situation, input tax can still be claimed on any expenses incurred in the UK that relate to the deal in question. This is because the sale would have been taxable if it had been made in the UK. This outcome is often known as “outside the scope with recovery”.

Trap. You might have to register for indirect taxes in Turkey as you are buying and selling goods in that country.


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