VAT when you start trading internationally
Winning customers overseas is good news, but it changes the way VAT works for your business. The treatment depends on whether you sell goods or services, whether your customers are businesses or consumers, and where the goods start and finish their journey. Getting it wrong can mean charging UK VAT you did not need to, or failing to charge it when you should have.
Exporting goods: zero-rating and evidence
Goods exported from the UK can usually be zero-rated, but only if the conditions are met. The goods must leave the UK within the time limit, normally 3 months from the time of supply, and you must obtain and keep evidence of export within the same period. Acceptable evidence includes official evidence from the Customs Declaration Service and commercial evidence such as bills of lading, air waybills and consignment notes. If you cannot produce the evidence in time, the sale should be treated as subject to UK VAT. HMRC's rules are in VAT Notice 703.
Ex-works sales, where the customer collects the goods, are a common problem area because you rely on the customer or their haulier for the evidence. Many businesses protect themselves by taking a deposit equal to the VAT until proof of export arrives. Your delivery terms also affect who pays any import VAT and duty at the other end, which can surprise customers if it is not agreed up front.
Services, imports and overseas registrations
Services follow separate place of supply rules, which we cover on our cross-border services VAT page. Buying goods from abroad brings import VAT, explained on our postponed import VAT accounting page.
Selling to consumers in other countries, holding stock abroad or running events overseas can create a requirement to register for VAT or a sales tax in that country. We help you spot when that might happen, and where an overseas registration or local filing is needed, we suggest you speak to an adviser in that country and work alongside them on the UK side.
How we help
- We map out your international sales and purchases and confirm the UK VAT treatment of each.
- We review your export evidence process so zero-rating holds up if HMRC asks.
- We set up VAT codes in your software so international transactions appear correctly on your VAT returns.
- We flag where you may have obligations abroad and help you brief a local adviser.
What we'll need from you
A description of what you sell and to whom, the countries involved, your delivery terms (Incoterms), sample invoices and shipping documents.
Exporters across Kent
Kent's ports and the Channel Tunnel make it a natural base for businesses trading with Europe and beyond. We help exporters across the county get their UK VAT position right. Send us a message to discuss your plans.
Frequently asked questions
Can I zero-rate goods sold to an overseas customer who collects them?
Possibly, but it is riskier. For indirect exports the customer arranges export, and you still need valid evidence that the goods left the UK within the time limit. If the evidence does not arrive, you may have to account for UK VAT. Many businesses take a deposit equal to the VAT until evidence is received.
Do I need to register for VAT in other countries?
It depends on what you sell and where. Selling goods to consumers abroad, holding stock overseas or supplying certain services such as event admission can create foreign obligations. We help identify when this might apply, but registration and filing abroad should be handled by an adviser in that country, and we can work alongside them.
What evidence of export should I keep?
Keep official evidence from the customs system, such as the movement reference number, or commercial transport documents like a bill of lading or air waybill, together with your invoice and order. The evidence should clearly link to the specific goods and sale. HMRC can ask to see it when checking your returns.
Do exports count towards the VAT registration threshold?
Yes. Zero-rated supplies, including exports of goods, are taxable supplies and count towards your taxable turnover for the registration threshold. A business selling mainly overseas can therefore need to register even though it charges little or no UK VAT. Registering can also let you reclaim VAT on costs.
International VAT Advice across Kent
We help clients throughout the county, including: