Global Logistics

UK VAT and UK Returns Regulation

Why is VAT not due on items returned from the Channel Islands to a UK retailer for a full refund?

1. Freight transport and associated services (VAT Notice 744B)

Returned goods

When you return goods to a supplier or a customer returns goods to you, the balance of payment can be settled by issuing either a:

• replacement invoice
• credit or debit note

If you exchange the goods for goods of the same value, you don’t need to issue a new VAT invoice.

2. Goods re-imported in the same state (Return)

If you re-import your own goods in the same state as they were exported, you need not pay import VAT, provided:

• the goods were last exported from the UK or EU by you
• the goods meet conditions 2-5 in the checklist for Customs Duty Returned Goods Relief in section 5 of Notice 236: Returned Goods Relief
• any import VAT chargeable on the goods was accounted for or paid, and neither has been nor will be reclaimed
• the goods were not exported with a view to avoiding or abusing the normal VAT supply rules by using Returned Goods Relief

This relief is intended primarily to avoid import VAT having to be paid and reclaimed, perhaps several times, for example, on goods taken outside the UK or EU on approval and brought back to the UK unsold or on tools and equipment returned to the UK after use outside the EU.

There are various returned goods reliefs, each of which has its set of limiting conditions, and in certain circumstances, you may have a choice of more than one. A complete list of returned goods relief CPCs detailing the type of procedure for which goods may be entered can be found in UK Trade Tariff Volume 3. You will find details of the entry procedures for claiming relief on reimported goods in Notice 236: Returned Goods Relief.


3. Notice 236: Return Goods Relief