Businesses that take goods to other European cities to sell,
typically a Christmas market at this time of year may fall foul of
a new VAT ruling, warns chartered accountant Clement Keys.
A recent Tribunal case involving a UK based business that tried
to reclaim VAT they had paid on sales at a country fair in Germany
illustrates the problem that can arise.
Steven Simmonds, Director of VAT Services at Clement Keys
explains: "As the business was VAT registered in the UK and not in
Germany it had always accounted for UK VAT on both its UK and
German sales. However, the business decided that no VAT should have
been declared on the German sales and sought a refund from HM
Revenue & Customs covering a period of 3 years
"HMRC refused the claim and the Tribunal rejected the business's
appeal agreeing with HMRC that UK VAT was due on the removal of the
goods to the UK.
"The problem for the business was that the removal of the goods
from the UK to Germany can only be 'zero rated' if the purchaser
was registered in Germany, as this was not the case UK VAT was
due.
"Christmas markets are very popular at this time of year, but
any UK business that travels to another EC member state to sell at
their Christmas market should be aware that if they take stock out
of the UK they may be liable to UK VAT on that stock if they are
not registered in the other EC member state."