This issue, SITPRO’s Helpdesk Manager, Aileen Prendergast, addresses the issue of VAT for ex-works consignments.
Q. We normally supply our overseas customers on a CFR basis. A customer has asked to purchase their next consignment on an ex-works basis. Can we still zero rate for VAT?
A. If you are supplying goods to an overseas customer on an ex-works basis, then you may still zero rate for VAT as long as you ensure that the customer or carrier provides you with valid commercial evidence that the goods have left the UK within the appropriate time limits. Commercial transport evidence would be for example a copy of the bill of lading or air-waybill; a certificate of shipment containing full details of the consignment and how it left the UK or in the case of shipment by road, a copy of the CMR duly signed by the receiving customer. However, these documents alone do not suffice as proof of export and you must also retain other supporting evidence including a copy of the order from your customer with full contact details and delivery address and copies of the invoice showing invoice number and full description of the goods. If you are unable to obtain evidence of export, or the evidence is found to be false, then you will become liable for VAT. You should therefore either make provision of the necessary documentation by your customer a part of the sales contract and/or ask for a deposit equal to the VAT amount that can then be refunded on receipt of evidence of export.
Further information can be found in VAT Notice 703 Export of Goods from the United Kingdom: http://customs.hmrc.gov.uk/channelsPortalWebApp/ channelsPortalWebApp.portal? _nfpb=true&_pageLabel=pageLibrary_PublicNoticesAndInfoSheets &propertyType=document&columns=1&id=HMCE_CL_000130 (Link to an external site - Disclaimer 
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If you need help with a trade procedures query, call Aileen at the SITPRO Helpdesk on
020 7215 8150 or email aileen.prendergast@sitpro.org.uk 
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Return to SITPRO News: Issue 53, Summer 2005