VAT 407 - vat refunds for overseas visitors

[YorkShop]

Dears,

I hope to get the right answer here: I found this forum excellent for most of my doubts.

I have opened a shop in York city centre and once a week I see Japaneese tourists with a guide walking through my street. A couple of days ago 2 tourists, that do not speak a single word of English, came in the shop and decided to buy 2 fashion bags. The guide told me that they needed the form 407 for the VAT refund at Heathorw airport, as they were overseas visitors.

I was not expecting that, and I tried to manage quickly online and decided to call HMRC to download the form. Unfortunately I was told that this form is not downloadable and that I had to wait they went to send to me.

I managed well with the visitors giving them an item for free, but I have decided anyway to get the forms and now I have them.

Sorry for the long preamble, my question is: now that I could give the 407 form to overseas visitors, do I have to expect some papers from HMRC? if so, saying what kind of thing?

I mean, is it worth to give the VAT 407 form or I am going to pay something (again) back to Customs?

I would like to attract tourists from overseas, but I would like to understand if it is worth or not.

Hoping you can tell me something based on your experience, I thanks in advance for all the answers.

 

[Anna Chandley]

Sorry no experience of this but have you read VAT Notice 704 which gives details of how the scheme operates.

Anna

 

[YorkShop]

Sorry no experience of this but have you read
VAT Notice 704 which gives details of how the scheme operates.

Anna

Thank you Anna,

I am reading this right now.

It seems I have nothing to lose doing the VAT 407, just I have to be sure everything is filled properly and I have to explain the customer what he has to do to get back (totally or partially) the 20% of VAT.

I am trying to understand what it means this paragraph:

"You cannot zero-rate the sale unless you have a stamped VAT refund document showing that the goods have been exported within the time limit and can show that the refund has been made to your customer."

I think to have got it, but I would like to have a better explaination: i.e. How can I zero-rate a sale? and when?

Thanks in advance if someone can let me know.

 

[Anna Chandley]

The way I read it the steps would be as follows

1 Sell item to customer for £100 plus VAT £20
2 Sales is included on VAT return as standard rated and £20 paid to HMRC
3 Customer gets 407 form stamped by customs when leaving UK
4 Customer send back stamped 407 to you
5 You refund £20 to customer
6 Reverse initial standard rated sale and enter as zero rated sale on VAT return and claim back £20 from HMRC via VAT return

The notice says that you can charge an admin fee or set a minimum spend for the scheme - i think you would probably want to do this otherwise the costs of admin could wipe out any profit on the sale

Anna

 

[YorkShop]

The way I read it the steps would be as follows

1 Sell item to customer for £100 plus VAT £20
2 Sales is included on VAT return as standard rated and £20 paid to HMRC
3 Customer gets 407 form stamped by customs when leaving UK
4 Customer send back stamped 407 to you
5 You refund £20 to customer
6 Reverse initial standard rated sale and enter as zero rated sale on VAT return and claim back £20 from HMRC via VAT return

The notice says that you can charge an admin fee or set a minimum spend for the scheme - i think you would probably want to do this otherwise the costs of admin could wipe out any profit on the sale

Anna

Thanks again Anna.

We are deciding to set up an admin fee + a minimum spen to apply for the scheme because I checked on the 407 form that customer need to provide to the retail a Bank/ Credit card account for refund + expire date, that it means I will have to pay my Bank for this transaction (I will check how much is it and I will set up a similar amount to be paid for admin fee).