VTRANS080200 - Transport and related services connected with imports and exports: Zero-rating of services connected with imports

The zero rate under item 11(a) of Group 8 provides relief for the handling and storage of goods at the place where they have been imported for VAT purposes.

It also zero-rates the transport, handling and storage of goods, where they have a place of supply in the UK in connection with a journey from the place of importation to their destination within the UK. Such services are zero-rated, to the extent the place of supply is in the UK, whether or not they have been included in the value of the goods at importation.

When goods are transported to the UK from a place outside the UK, the transport is zero-rated under item 5 of Group 8 to the extent that the place of supply is in the UK - see VTRANS060200.

The “destination” for this purpose is the furthest specified place in the UK to which the goods are consigned at the time of importation. It is the place stated on the consignment note or any other document by means of which the goods are imported. When that place is unknown, it is generally the place of importation.

However, the service(s) must be supplied in connection with an importation.

A supplier of such services must hold documentary evidence to show entitlement to zero-rating under item 11(a), i.e. that the service is connected with an importation.

The main forms of documentary evidence include:

  • consignment notes;
  • bills of lading;
  • certificates of shipment;
  • air or sea waybills; and
  • Customs declaration Forms C88 (SAD).

Additionally, a combination or all of the following may provide suitable evidence:

  • inter-company correspondence;
  • the customer’s order document;
  • payment details;
  • sales invoices; and/or
  • advice notes.

These lists are not exhaustive: you should use your discretion in accepting other commercial evidence which may be available to demonstrate that a transaction is part of an international movement.

Services of storage and handling of goods which do not qualify for zero-rating under item 11(a) because they are one step removed from the actual importation of goods and transport to their destination. However, from 1 June 1996 they may qualify for relief under the VAT Act 1994, section 18(C) where they are carried out on goods in a warehousing suspense regime: see IMPS - Imports.

Examples of services which are zero-rated under item 11(a)

  • Goods arrive at Dover from Switzerland, and are consigned to Birmingham. The transport is zero-rated to the extent the place of supply is the UK.
  • Goods arrive in Holland from the USA, but do not enter free circulation. They are transported from Holland to the UK under T1 status where they are imported for VAT purposes. The supply of transport is zero-rated to the extent that the place of supply is in the UK.
  • A groupage consignment arrives in the UK and is taken to an inland clearance depot (ICD). Some of the goods are consigned at import to various destinations elsewhere in the UK, beyond the ICD. Zero-rating will continue to apply to supplies of the transport, handling or storage that has a place of sully in the UK until the goods arrive at their stated, individual destinations.

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Examples of services which are not zero-rated under item 11(a)

Item 11(a) does not zero-rate

  • services which are unconnected with a movement of goods from a place outside the UK to a place within the UK;
  • the transport of goods after their arrival at the destination. For example, the transport after arrival at a warehouse (the destination), where the customer is known but the further destination elsewhere in the UK is not known. When the goods are at some later date called off for consignment to a branch, the transport and any related services would not be zero-rated under item 11(a);
  • the handling of goods after they have been unloaded at the destination;
  • the storage of goods at the destination; or
  • services relating to goods which have been entered into a customs suspension regime (such as temporary importation) on arrival in the UK because they have not been imported for VAT purposes- but see Sections 6 and 7 of this chapter and Notice 702 Imports, for details of other reliefs available.