No income tax, no VAT…

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No income tax, no VAT…

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It was all well and good for Del Boy (Christmas special repeat must be upon us), not to have any paperwork. In a world where every overseas sale is an export, the risks for businesses associated with not having all of the right documentation are high.

In a case heard in the Courts, a pre-Brexit exporter of goods challenged an HMRC assessment raised because they could not provide all of the export documentation HMRC expected to see, to support zero rating of goods removed from the UK (and at that point the EU).? The taxpayer held evidence the goods had left the UK, but as it was not the formal export documentation, HMRC deemed this inadequate.? Whilst common sense prevailed in the Courts, the taxpayer had to incur the expense and stress of a hearing to achieve the common sense outcome.

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Given the significant increase to the volume of exports in a post Brexit world, the likelihood of these type of assessments will only increase.? Furthermore, getting the exact documentation from the carrier can be challenging when there is not a process in place for it to be automatically issued at the point of export.

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We would expect the Courts to provide further guidance as cases continue to work their way through, ultimately encouraging HMRC to use its discretion.? However, in the meantime, the risk of large assessments which need to be paid (subject to hardship claims) whilst litigation (itself costly) resolves the position, can be mitigated by trying to ensure that the export documentation is obtained at the point of shipping.

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If you are exporting and worried about what documentation you need to retain, we would recommend that you contact your accountant/tax advisor because sometimes you need to ask the question to get the best advice.

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