Module 14: Cross Border Aspects of VAT

Question 1

Acquisitions

Answer 1

Goods processes by a UK business from a business registered in another EU member state

Question 2

Acquisitions - original producer

Answer 2

Zee rates goods (so can reclaim domestic input tax)

Question 3

Acquisition -UK buyer

Answer 3

Must submit VAT return for acquisition to HMRC and reclaim if registered in same return

No outflow of cash

Question 4

Dispatches

Answer 4

Goods supplied to customers elsewhere in the EU

Question 5

If seller to EU country has customer’s VAT number - despatch

Answer 5

Sales are zero rated

Question 6

If no VAT number for goods dispatched to EU

Answer 6

Charge UK VAT in normal way

Question 7

Imports

Answer 7

Movement of goods into the UK from non-EU country

Question 8

Imports - VAT

Answer 8

Suffer direct VAT charge when enter EU (import VAT) - pay to release goods from customs

Question 9

Import tax on VAT return

Answer 9

Claimed as input tax - reclaimed on next VAT return

Question 10

Exports

Answer 10

Selling UK goods outside the EU

Question 11

Exports - taxation

Answer 11

Zero rated

Question 12

Customs duties

Answer 12

Payable on imports into EU member states - once paid goods are free to move within the EU

Question 13

Duty deferment scheme

Answer 13

Release goods on release of SAD and collect duties from the importer later

Question 14

Commodity code

Answer 14

Determines the rate of duty applicable

Question 15

Ad valorem duty

Answer 15

Product specific % x cost (including insurance + freight)

Question 16

Specific duties

Answer 16

Calculated by reference to weight/ volume

Question 17

Anti-dumping duties

Answer 17

To protect EU producers from competition from cheap imporys

Question 18

CIF value

Answer 18

Cost + insurance + freight

Question 19

Import VAT calculation

Answer 19

Rate x (CIF value + customs duty payable)

Question 20

Inward processing

Answer 20

Relief from customs duty and import VAT when goods imported for processing before being exported again

Question 21

Inward processing conditions (4)

Answer 21

• authorised by HMRC
• throughput period agreed (how long goods will be in EU)
• guarantee required to cover customs duty due
• detailed records and quarterly returns

Question 22

Returned goods relief

Answer 22

Allows EU goods to be reimported within 3 years free of customs duties and import VAT

Question 23

RGR applies where (3)

Answer 23

• EU goods have been exported
• Reimported within 3 years
• in same state as originally

Question 24

Criminal penalties - customs duties

Answer 24

Fine of up to £2500

Question 25

Dishonest evasion of duty

Answer 25

• demand notice of up to 100%

- penalty may be reduced by up to 75% where person has cooperated and given full disclosure

Question 26

If individual not VAT registered and outside EU exports

Answer 26

Zero rate

Question 27

Duty deferment scheme payment due

Answer 27

Import VAT and customs duty due on 15th of following month

Question 28

Requirements for duty deferment scheme

Answer 28

Recognised bank guarantee

Question 29

Underpaid duty from importer

Answer 29

HMRC can recover underpaid duty for up to 3 years