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tax briefcase

When a UK business makes sales to overseas customers, it can be a little confusing at first when deciding how to treat VAT.  Here are a few tips for preparing invoices for export sales of goods from a UK supplier’s perspective. Be sure to check out our other guide for how to invoice for services which are slightly different.

The following applies to a UK trader who is VAT registered.

  • If a customer is a business based in a country within the EU, and is also VAT registered, then the invoice should not contain UK VAT as the sale is considered to be Zero rated.Note: to qualify for zero rate, the customers VAT number must be quoted on the sales invoice in addition to the suppliers VAT number which should be quoted on all sales invoices.
  • If the customer is a small business in an EU country, and is not VAT registered, or alternatively is an end consumer, then UK VAT must be charged as normal on the invoice.
  • If the customer is outside of the EU, then no VAT should be charged. The customers VAT number is not required.

There are a few other items which are also important when preparing documentation for exports.

  • Proof of export must be obtained within three months of the sale and must be retained for potential inspection.
  • Zero rated VAT is later dealt with on the UK suppliers VAT return using the reverse charge mechanism.
  • All of the above applies only to UK companies who are VAT registered.
  • Sole Traders who are not VAT registered must not charge VAT under any circumstances.

Transform Accounting are Chartered Management Accountants and Tax Technicians able to assist with personal tax returns, sole traders and company payroll whilst specialising in limited companies, consultants, contractors and business start-ups. Fixed fee packages are available as are free initial consultations. Customer references are available on request.

See www.transformaccounting.co.uk or contact Jacinta Smith on 01277 365447

Accountant BrentwoodTransform AccountingEssex Accountants

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