Upper Tribunal Tax and Chancery Chamber

UT/2024/000070 - [2025] UKUT 00210 (TCC)

Fecha: 25-Mar-2025

law

law

At the time of the relevant transactions in 2016, the UK was still a Member State of the European Union and the relevant supplies relied on by the Appellant between the UK and Belgium where therefore intra-Community removals of goods. In relation to those Article 138(1) of the Principal VAT Directive (2006/112/EC) provided:

‘Member States shall exempt the supply of goods dispatched or transported to a destination outside their respective territory but within the Community, by or on behalf of the vendor or the person acquiring the goods, for another taxable person, or for a non-taxable legal person acting as such in a Member State other than that in which dispatch or transport of the goods began.’

Regulation 134 of the VAT Regulations 1995 implemented that obligation to exempt by providing for the zero-rating of intra-Community movements of goods as follows:

“134.
Where the Commissioners are satisfied that
(a)
A supply of goods by a taxable person involves their removal from, the United Kingdom,
(b)
The supplies are to a person taxable in another member State …
(c)
The goods have been removed to another member State,
the supply subject to such conditions as they may impose shall be zero rated”

HMRC imposed such conditions in VAT Notice 725, certain provisions of which were specified to have the force of law.

Paragraph 4.3 of the Notice which had the force of law stated:

“A supply from the UK to a customer in another EC Member State is liable to the zero rate where:
• you obtain and show on your VAT sales invoice your customer's EC VAT registration number, including the 2-letter country prefix code, and
• the goods are sent or transported out of the UK to a destination in another EC Member State,
and
• you obtain and keep valid commercial evidence that the goods have been removed from the UK within the time limits set out at paragraph 4.4”

The time limits, in paragraph 4.4, which also had the force of law, were expressed, so far as relevant, as follows:

“In all cases the time limits for removing the goods and obtaining valid evidence of removal will begin from the time of supply. For goods removed to another EC Member State the time limits are as follows:
• 3 months…”

As regards evidence of removal, paragraph 5.1 (which did not have force of law) provided:

“5.1
Evidence of removal
A combination of these documents must be used to provide clear evidence that a supply has taken place, and the goods have been removed from the UK:
• the customer's order (including customer's name, VAT number and delivery address for the goods)
• inter company correspondence
• copy sales invoice (including a description of the goods, an invoice number and customer's EC VAT number etc)
• advice note
• packing list
• commercial transport document(s) from the carrier responsible for removing the goods from the UK, for example an International Consignment Note (CMR) fully completed by the consignor, the haulier and signed by receiving consignee
• details of insurance or freight charges
• bank statements as evidence of payment
• receipted copy of the consignment note as evidence of receipt of goods abroad
• any other documents relevant to the removal of the goods in question which you would normally obtain in the course of your intra-EC business
Photocopy certificates of shipment or other transport documents are not normally acceptable as evidence of removal unless authenticated with an original stamp and dated by an authorised official of the issuing office.”

10.

Paragraph 5.2, which did have force of law, mandated what had to be shown on the documents used as proof of removal:

“The documents you use as proof of removal must clearly identify the following:
• the supplier
• the consignor (where different from the supplier)
• the customer
• the goods
• an accurate value
• the mode of transport and route of movement of the goods, and
• the EC destination”

11.

The guidance which followed explained that “vague descriptions of goods, quantities or values are not acceptable”.

12.

Paragraph 5.5 which did not have the force of law stated:

5.5

What if my customer collects the goods or arranges for their collection and removal from the UK?

If your VAT registered EC customer is arranging removal of the goods from the UK it can be difficult for you as the supplier to obtain adequate proof of removal as the carrier is contracted to your EC customer. For this type of transaction the standard of evidence required to substantiate VAT zero-rating

Before zero-rating the supply you must ascertain what evidence of removal of the goods from the UK will be provided. You should consider taking a deposit equivalent to the amount of VAT you would have to account for if you do not hold satisfactory evidence of the removal of the goods from the UK. The deposit can be refunded when you obtain evidence that proves the goods were removed within the appropriate time limits.

Evidence must show that the goods you supplied have left the UK. Copies of transport documents alone will not be sufficient. The information held must identify the date and route of the movement of goods and the

mode of transport involved. It should include the following:

~ • ------------

5 Registration number of the vehicle collecting the goods and the name and signature of the driver and, where the goods are to be taken out of the UK by a different haulier or vehicle, the name and address of that haulier, that vehicle registration number and a signature for the goods.

6 Route, for example, Channel Tunnel, port of exit.

7 Copy of travel tickets.

8 Name of ferry or shipping company and date of sailing or airway number and airport.

9 Trailer number (if applicable).

10 Full container number (if applicable).

….”

13.

Paragraph 4.6 provided that “if the goods are not removed or you do not have the evidence of removal within the time limits you must account for VAT as described in paragraph 16.10. That paragraph explained that “if the goods have not been removed or you do not have satisfactory evidence of removal within 3 month…” VAT must be accounted for.

14.

Paragraph 16.12 addressed the adjustment traders needed to make to their VAT account if goods were not removed or the trader had not received evidence of removal with the relevant time limit. The Notice provided that VAT records should be amended and VAT accounted for on the invoiced amount of consideration received. Paragraph 16.13 then provided that “If the goods are subsequently removed from the UK and/or you later obtain evidence showing that the goods were removed, you may zero rate the supply and adjust your VAT account for the period in which you get the evidence.”