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bigduckontax
bigduckontax, Accountant
Category: Tax
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Experience:  FCCA FCMA CGMA ACIS
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The scenario is as follows: 1. ABC (UK) Ltd will be importing

Customer Question

The scenario is as follows:
1. ABC (UK) Ltd will be importing spinal implants from a warehouse in France.
2. XYZ (UK) Ltd will be importing spinal instruments (for inserting the above implants) from a warehouse in France.
JKL SA (a Switzerland company) will invoice both ABC (UK) Ltd (for purchase of implants) and XYZ (UK) Ltd (for purchase of instruments).
Even though JKL is a Switzerland company with a Swiss address they have a French Vat number and they state on the invoice 'VAT exemption, article 262 ter 1 CGI'. This refers to French tax code.
The question is:
1. Is the above transaction exempt of paying Vat on import (due to it being an intra EU transaction with both seller and buyer having EU Vat numbers) or
2. Will ABC (UK) Ltd and XYZ (UK) Ltd be liable to pay Vat to customs on importation of the implants/instruments and claim the Vat back on their Vat returns to HMRC.
Please take into account that both ABC (UK) Ltd and XYZ (UK) Ltd will have UK Vat numbers and that JKL SA uses a French Vat number.
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.

Hello, I'm Keith and happy to help you with your question.

On importation of these items into the UK HMRC may impose import duties and VAT. I cannot assist you with import duties as there are simply hundreds of these. If imposed they are not recoverable and would form part of your cost of sales. The VAT imposed on import would be an input tax in ABC's and XYX's VAT accounts. I note that such supplies in the UK are standard rated for VAT so when sold on by ABC and XYZ will have to be invoiced including the tax.

I do hope I have solved your question. It really is very simple. If HMRC impose VAT on importation claim it back on the quarterly return, but import duties will have to be absorbed.

Customer: replied 2 years ago.

Thank you.

Since all the 3 companies will have VAT numbers on their invoices, would VAT still have to be actually paid and then claimed back, or no VAT will be payable due to the VAT numbers on the invoices. This is in light of the fact that both ABC (UK) Ltd and XYZ (UK) Ltd will have UK Vat numbers and that JKL SA uses a French Vat number but is a Swis company?

Expert:  bigduckontax replied 2 years ago.
When the items are imported HMRC may charge import duty and VAT. The goods will not be released until the bill for importation is paid. If there is VAT on such a bill it is an input and thus reclaimable on the VAT 100 form which is completed quarterly. There is always a possibility that HMRC may not impose any charge at all when the goods are imported. This is outwith the normal VAT imposed by the vendors, if any.
Customer: replied 2 years ago.

My apologies for may be not making my question clear. I am an FCA and in practice for over 30 years. I just would like a 2nd opinion from you with regard to VAT payable within the EU. As you know, sending goods to someone who is VAT registered in the destination EU country, you can zero-rate the supply for VAT purposes. In my client's case, even though JKL is a Switzerland company with a Swiss address they have a French Vat number and they will be sending goods to a UK company.

Expert:  bigduckontax replied 2 years ago.

Yes, I've got that, the horrible reverse charge scenario. One of my companies is still receiving monthly EU Sales Lists when the only EU transaction it ever did was over 20 years ago!

That is not the point. If HMRC charge VAT and import duties on importation, they may or they may not, but if they do reclaim ithe VAT and absorb the import duty.

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