HMRC has published the above brief which details changes to the rules for zero-rating supplies of goods for indirect export outside the European Union.

In principle, no VAT is due on goods which are exported from the EU though strict conditions must be met before sales can be zero-rated. Under EU VAT law, no VAT is due on indirect exports provided the overseas customer does not have a business establishment in the supplier’s country. Indirect exports occur where goods are collected, or arranged to be collected, by the overseas customer.

The UK has implemented this condition into national law but with a further requirement that the customer is not registered for VAT in the UK.

EU law does not deny zero-rating where an indirect export takes place, and the customer is registered for VAT in the same country as the supplier but has no establishment in that country. Therefore, the UK legislation will be amended from 1 October 2013 to ensure that UK law complies with EU law. The amendment will remove the restriction in UK law which denies zero-rating where the customer is VAT registered in the UK. However, the condition relating to the business not having a business establishment in the UK will still apply.

The Brief is available on the HMRC website.