Overseas visitors not established in the European Union can reclaim VAT on goods bought and exported from the European Union (EU), including UK, if they comply with the requirements in the following article.
Who qualifies for a VAT refund?
Overseas visitors, not established in the EU, if:
- The domicile or habitual place of residence of a visitor is not situated within the EU, and
- Visitor intends to leave the UK for a final destination outside the EU with the goods by the last day of the third month following that in which the goods were purchased, and
- Visitor exports the goods, having produced them, their receipts and the VAT refund document to the Customs officials at the point of departure from the EU.
Non-EU residents studying or working in the UK or EU residents, if:
- They intend to leave the EU for a minimum period of 12 months, and
- Leave the UK with the goods by the last day of the third month following that in which the goods were purchased for an immediate destination outside the EU; and
- Export the goods having produced them, their receipts and the VAT refund document to Customs at the point of departure from the EU.
What goods qualify for VAT refund?
All goods qualify for VAT refund, except:
- a boat for sail to a destination outside the EU;
- goods over £600 in value exported for business purposes;
- goods that will be exported as freight;
- goods requiring an export licence (except antiques);
- unmounted gemstones;
- bullion (over 125g, 2.75 troy ounces or 10 Tolas);
- mail order goods including Internet sales;
- goods that have been and used or partly used within the EU;
- service charges for services obtained within the EU.
Where tax free goods can be bought?
Tax free goods can be bought from shops operating VAT Retail Export Scheme. The Scheme is voluntary
and shops do not have to operate it. One should ask before buying goods.
Documents required for the VAT refund
At the time of sale the retailer will ask for a proof, that the person is eligible to use the Scheme and receive VAT refund (for example, the passport of the customer).
The customer completes VAT refund form provided by the retailer (till receipts alone are not acceptable). The form will be either;
- an official Customs Form VAT 407; or
- a shop or refund company’s own version of the VAT 407 form ;or
- a VAT Retail Export Scheme sales invoice.
The form should be completed at the time of purchase, in the presence of the retailer. Another person is not allowed to complete the form on behalf of the client. Both the retailer and the buyer have to sign the form at the time of the purchase.
Full price of the goods including VAT should be paid at the time of sale. The refund is received after exporting the goods from EU. The refund could be received from the retailer, refund company, or from cash refund booth at the airport. The terms of refund should be agreed with the retailer at the time of sale. The retailer or the refund company are eligible to charge fee to cover administrative or handling expenses. However the administration charge should be clearly shown on the refund form.
Custom procedures when leaving the UK
If the visitor:
1. Leaves the UK for an immediate destination outside the EU, then goods and the refund form must be presented to the UK Customs at the port or airport of departure. Items that will be checked in as hold baggage must be produced to Customs before baggage check in. When Customs are satisfied that all the conditions of the Scheme have been met, they will certify and return the refund form.
2. Leaves the EU on a through (transit) flight via another EU Member State, then:
- Goods carried as hand baggage must be produced to Customs in the last EU Country with the refund form before leaving to return home.
- Goods carried as hold baggage must be produced to Customs in the UK with the refund form before baggage check in.
3. Leaves the UK via another EU country, then the goods and refund form are presented upon the departure from the EU country to the Customs authorities of last EU country visited. The original deadline for the presenting the receipts applies and runs from the moment of purchase of the goods.
In most cases there are Custom posts in the ports or airports however some of the smaller UK ports and airports do not have a 24 hour Customs presence. At such places there will be either a telephone to ring the officer or a clearly marked Customs post box to deposit your form. Customs will collect the form and if they are satisfied that all the conditions have been met, they will certify it and return it to the retailer to arrange the refund.
After VAT refund form has been certified by Customs, the visitor should:
- send by post the refund form to the retailer to arrange payment of refund, or
- send by post the refund form to the commercial refund company to arrange payment of refund, or
- hand the form to a refund booth to arrange immediate payment, if such is available.
The method of payment should have been agreed between the visitor and the retailer at the time of sale.
If the refund is not received within a reasonable time, the visitor should write to the retailer.
The refund will not be received if the VAT refund document is not fully completed. Besides, one must produce goods and the VAT refund document to customs when leaving the EU.
Services we offer
We are pleased to able to offer the following taxation based services: -
All taxation services are arranged on a fixed fee basis with the fee to be charged agreed in advance of any work being undertaken.
- A General tax consultation and/or specific tax advice;
- Tax planning for your general situation or for a specific transaction;
- Registration for National Insurance and Unique Tax Reference numbers;
- Preparation and submission of annual self-assessment returns;
- Preparation and submission of return for overseas landlords;
- Formation of UK and offshore companies in respect to an acquisition of the commercial property and administrative and accounting services for corporate entities.
For all questions regarding your business in the UK and tax planning, please contact our Business Consultancy team at Law Firm Limited on +44 (0)20 7907 1460 or via email