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VAT Retail Export scheme

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The VAT Retail Export Scheme is a voluntary scheme which permits purchasers for reclaiming a VAT on nearly all goods that are purchased and then exported out of the European Community (EC). The goods must go away the EC by the last day of the third month in which the goods were purchased (for example, goods bought in January must be exported by 30 April). Retailers should be registered for VAT in order to activate the scheme. Passport, identity card, driving licence may be the suitable proofs for purchaser to qualify for this scheme. The retailer then requests the purchaser to complete and sign a refund form on the retailer’s premises. This form may be either an official Customs VAT 407 Form, your shop's own version of it or a VAT Retail Export Scheme sales invoice.

EU residents (including someone from the UK) who are going to depart from the EU for a period of minimum one year at some stage in the following three months with the supportive documents like an overseas work permit, approved visa application, residency permit etc.
Visitors in a foreign country studying or working in the UK should show their visa or work permit to prove that they are leaving within the following three months

At the port of departure or while leaving the EU, the customer must present the goods, receipts completed refund document to the proper HMRC representative or a customs export officer and put the goods accessible for inspection. The refund form will then be stamped & certified by the custom officer if the goods are in order. The customer will then send the form back to the retailer who will arrange for a reimbursement of VAT to the customer (the method through which the repayment is done must be mutually agreed upon at time of sale).

After receiving the certified VAT refund documents with a customs stamp then Retailers will by and large arrange for a refund. Many retailers may employ a VAT refund company to create repayments on behalf of them. In that case the purchaser should send certified VAT refund documents to the refund company. Some refund companies activate from airport refund booths and reimburse the refundable amount with an additional administrative charge if the purchaser is leaving directly from the UK with the goods.

Some Services are not eligible for the scheme such as hotel, car rental, taxi fares and meals - even though you are charged VAT on them. Main exclusions are goods worth more than £600 in value exported for business purposes; goods required an export license (other than antiques), uncounted gems and bullion.

The scheme may not also qualify for goods sold by mail order or over the internet, nor for goods exported as freight. If antiques require an export license, the customer should acquire this earlier than the goods are exported.

The scheme does not apply to goods sold to diplomats, members of international organizations and NATO forces in other EU member states.

Margin Scheme for second-hand goods

While selling goods under the Margin Scheme for second-hand goods the refund document (form VAT 407 or your invoice) should be headed 'Second-hand goods. This document is settled in accordance with Notice 704, paragraph 5.8'. You leave blank the amount of VAT included in the price, but complete the refund-due box.

Auction sales

If you take the help of an auction house for selling the goods you have the eligibility to use the Retail Export Scheme in the normal way.

VAT on administration or handling fees

If you deduct the administrative or handling expenses from the customer on the vat refund amount, you may consider it as a service to a customer outside the EU, which is zero-rated.

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