VFR03100 - Purchases in the UK by visiting NATO forces and their personnel: purchases by US forces

  

General

Under the terms of an Exchange of Notes between the UK and US Governments dated March 1952, certain purchases of goods and services in the UK by the US Government may be relieved of VAT. To qualify for the relief, the purchases must be made directly by the US authorities from registered taxable traders and must be for the use of the US forces in the UK. Relief is not restricted to the purchase of UK manufactured goods.

 

Conditions for relief on US forces purchases

VAT on supplies of goods and services to the US force and certain official instrumentalities of the US force may be relieved when the purchases are for:

  • the official use of the force for the common defence effort;
  • onward supply to individual entitled personnel for their personal use in the UK; or
  • the foreign aid programme of the US Government.

The goods must not be lent, hired out, given as security or transferred in the UK, unless prior approval has been given by HMRC.

Special arrangements exist for the disposal of:

  • US forces’ surplus or scrap materials (VFR04000);
  • gifts to charitable organisations (VFR04000); and
  • motor vehicles (VFR06400, ‘Private vehicles’ heading).

 

Liability of suppliers

Suppliers are required to register for VAT if the total of their taxable supplies (including any to visiting forces) is above the VAT registration threshold. This applies even if the majority or all of their supplies come under the reliefs in Conditions on relief on US forces purchases. Standard-rated supplies of goods or services made to the US forces free of VAT should be treated by the business as zero-rated supplies for accounting purposes. VAT registered businesses may reclaim the input tax on these relieved supplies. Zero-rated [or exempt] supplies of goods or services should be treated for VAT according to the rules for such supplies, input tax being claimed in accordance with normal VAT rules and regulations.

 

Purchases by US forces personnel

US forces personnel can purchase goods or services free of VAT directly from UK VAT registered businesses under the VAT free purchase scheme. The VAT inclusive price of the order must be at least £100.00. The entitled person must obtain a written quote in their name from the supplier stating the price of the goods or service. The quote will be presented to the individuals force authority who will issue a US government cheque in sterling for the cost of the goods or service excluding VAT and two copies of the US forces VAT-free Purchase Certificate. The individual must obtain a signature from the supplier on one copy of the certificate which must be returned to the force authority. The supplier must retain the second copy of the certificate as evidence that they have made an eligible VAT-free supply.

Additionally US forces personnel may:

  • purchase goods from UK businesses  operating as approved ‘concessionaires’ on US bases under certain types of ‘concession’ contracts with the US authorities (VFR03100, ‘General’ heading); and
  • purchase a motor vehicle of EC or EFTA manufacture (VFR06000).

 

Procedures for US forces official purchases

All supplies made by UK businesses under the terms of the visiting forces relief must be under a contract or purchase order that:

  • has been placed by an authorised contracting officer of the US forces whose status as a contract signatory has been notified to the visiting forces Unit of Expertise;
  • contains the following certificate (except for beer, for which see the next sub-paragraph) -

“The goods and/or services listed are to be delivered at a price exclusive of VAT under arrangements agreed between the appropriate US authorities and HM Revenue and Customs (Reference: PRIV 46/7). I hereby certify that these goods and/or services are being purchased for United States official purposes only”; and

  • for the supply of beer, contains the following certificate -

“The beer is to be delivered at a price exclusive of excise duty and VAT under arrangements agreed between the appropriate US authorities and HM Revenue and Customs (Reference: PRIV 83/186). I hereby certify that the beer is being purchased for US official purposes only.”

On completion of each contract, an official receipt (or a stamped certification) from the US forces must be issued to the VAT registered supplier to show that the goods and/or services have been delivered in accordance with the order of the contracting officer concerned (except in the case of continuous supplies of services, for example, telephone services, which are paid for periodically without a receipt being issued). The receipts must be retained by the supplier as evidence of making a VAT-free supply.

 

Purchases for US base welfare funds, officers and NCO's clubs

Purchases, which may include sports equipment, amusement requisites, furnishings, bands or entertainers for official functions, must be made by authorised contracting officers. The conditions and procedures in Conditions on relief on US forces purchases and Procedures for US forces official purchases apply.

 

Supply of hotel accommodation to US forces personnel

Accommodation for entitled personnel under official travel orders paid from official funds may be supplied free of VAT. Payment should normally be made by the entitled person. The entitled person must present their NATO travel orders to the local US Force lodging office, and if satisfied, the base lodging officer will issue a letter to verify the official nature of the trip.  The letter from the base lodging officer should be presented to the hotel at the start of the entitled persons stay and retained by the hotel as evidence of a VAT-free supply under the contract. No relief is available on incidental supplies of food or drink, or bar expenses. The conditions and procedures in Conditions on relief on US forces purchases and Procedures for US forces official purchases should be applied.

 

Goods and/or services supplied in 'concession shops' on US bases

Goods and/or services supplied to individual entitled personnel may be relieved from VAT when supplied by a VAT registered business operating on the US base under an authorised ‘concession’ contract with AAFES. The essential features of the 'concession' contract can be found at 'VFR12030 Appendix C - Traders operating under concession contracts with the US Forces'.                                                        

Air shows open days

Relief from VAT and/or excise/customs duty is allowed, in accordance with conditions agreed with the US Air Force, on:

  • charges for admission to air shows and open days; and
  • goods sold by US forces organisations during air shows and open days to persons not usually entitled to receive/consume them unless customs charges have been paid.

 

American military cemeteries

In order to place inland purchases on the same footing as imported goods, VAT is remitted on the supply of goods and services to the American Battle Monuments Commission for the maintenance of the American Military Cemetery and Memorial at Madingley, Cambridge and Brookwood, Surrey.