Selling to a Ship- VAT Query

[Lektra]

I have an electrical retail business and we've been asked if we can supply the appliances for use on ships which come into our local port. Mainly we'd be selling goods like washing machines and cookers, and only the occasional appliance every few months.

My question is, how do we handle the VAT in this situation? The ships are international and come from several countries but are mostly registered in the EU. The person I'm dealing with at the port has said that no VAT is payable on the goods, and that we charge them the ex-VAT price and process it as a 0% VAT sale. Is that correct? Having never sold 0% VAT or international goods before I'm just wondering how easy all this will be to work out on our VAT return!

 

[elaine@cheapaccounting]

I am not a vat expert but thia can't be answered unless you know ...

who is the customer?

To zero rate a supply to EU customer you need a valid vat number from them

 

[spidersong]

Actually the customer isn't particularly relevant in this case. It depends on the ship and where it's going and/or normally harboured, because it's done under a different zero rating provision to the one on sales to EU businesses.

Section 30 (6) of the VAT act allows for goods to be zero rated if they are for use as ships stores on a voyage with a non-private purpose (i.e. commercial shipping, commercial cruise ships etc. and not Fred Bloggs skippering his yacht worldwide for the hell of it), where the eventual destination of the voyage is outside the UK.

There are various criteria (goods must leave UK within 3 months, are shipped direct to the ship, are intended for use on the ship, are receipted by the captain/ships master etc.)

This section from HMRC internal manuals will help:
http://www.hmrc.gov.uk/manuals/vexpmanual/VEXP60000.htm

as will Section 10 of Notice 706 on exports:
http://customs.hmrc.gov.uk/channels...CE_CL_000130&propertyType=document#P696_75133

 

[elaine@cheapaccounting]

Actually the customer isn't particularly relevant in this case. It depends on the ship and where it's going and/or normally harboured, because it's done under a different zero rating provision to the one on sales to EU businesses.

Section 30 (6) of the VAT act allows for goods to be zero rated if they are for use as ships stores on a voyage with a non-private purpose (i.e. commercial shipping, commercial cruise ships etc. and not Fred Bloggs skippering his yacht worldwide for the hell of it), where the eventual destination of the voyage is outside the UK.

There are various criteria (goods must leave UK within 3 months, are shipped direct to the ship, are intended for use on the ship, are receipted by the captain/ships master etc.)

This section from HMRC internal manuals will help:
http://www.hmrc.gov.uk/manuals/vexpmanual/VEXP60000.htm

as will Section 10 of Notice 706 on exports:
http://customs.hmrc.gov.uk/channels...CE_CL_000130&propertyType=document#P696_75133

well there we go - knew I should have asked Steve Kettle.

That is a new one on me

Tax doesn't have to be taxing

 

[Williams lester]

well there we go - knew I should have asked Steve Kettle.

That is a new one on me

Tax doesn't have to be taxing

A new one on me too!

You learn something new every day .

 

[kulture]

I would not take the customer's word for it. After all you would be the one paying the VAT if it all goes wrong and they will have long left our shores.

It would not hurt asking HMRC for an opinion. It is an interesting question.

My initial thought was that it would depend on the point of supply. If you are delivering to a ship docked in the UK then I cannot see how UK VAT would not apply. If you supplied to a French company and delivered to their offices in London (say) then you would charge VAT. So why would a dockside address differ?

You say electrical goods for use on the ships? So you are not talking export goods or ships stores???

 

[elaine@cheapaccounting]

I think I would take the advice of a vat expert over anything the HMRC help line would say on this

 

[elaine@cheapaccounting]

and spidersong is a vat expert

 

[Lektra]

Thanks for all the help, ladies and gents! From the links spidersong provided it looks like we'll just have to sort out the paperwork we need when we deliver the goods and we'll be all set.

Answers to the points raised, in case anyody's still curious:

- The customers will be various commercial ship owners, all dealt with through the authorised shipping agent (e.g. if the ship's cooker breaks down en route to the UK the ship's owners contact the port agent and ask them to order one/make delivery arrangements in time for when the ship arrives.)

- The ships all leave the UK within 2 days or so and are commercial carriers

- The goods are for use on board the ship by crew members (kitchen appliances, mainly)

- We deliver direct to the ship and invoice the shipping agent.

Also, if anybody knows how to deliver a cooker through a 2'x2' hatch and down a spiral staircase in rough seas, let me know.