Customer is in the UK, they have an Office in the EU

We have charged UK VAT on an export, the customer is challenging this, as we have shipped the goods to an office they have in the EU, however they want us to invoice the UK. This is a B2B transaction for Goods and services (Services relate to work carried out on equipment prior to it being exported). Should we credit the VAT, as we have proof the goods have been exported, or should we stand out ground and leave the VAT charge on the invoice?

Hi S Newbold, Is your customer's UK office a branch or a subsidiary...? In my humble opinion - if you are invoicing your customer's UK subsidiary, then this is likely to be treated as a local sale, with VAT charged. Depending on when the ownership rights to the goods were transferred onto the UK subsidiary, the export could not have been yours - but the subsidiary's. It could potentially be that their invoice raised onto the EU office should have been VAT 0%-rated. This invoice would have been the basis of import valuation in the EU. However, if the UK office is a branch (not a separate legal entity from its parent), then, I think, you would be invoicing the EU office directly with 0% VAT for goods. Under VAT Notice 741A services may also be accepted for 0% treatment (work on goods for export).

Thank you, this has helped, looking at the customer relationship, they are registered as a separate entity, there isn't a link to indicate that they're part of a Branch. So we'll let them know the UK VAT has been charged correctly. Thanks again

Hi S Newbold
If you are exporting goods to the EU this will constitute a zero rated export as long as all the conditions are met here:
Conditions and time limits for zero rating
However if you are providing a service to the business customer of work on goods then the Place of Supply with determine whether VAT should be charged.
Please see the guidance below:
Services supplied ‘where performed’
The place of supply rules for services
However even if the busuness customer is deemed to belong in the UK the service can be zero rated under the provision below if the conditions met:
Zero rating
Thankyou.
 

Thank you, will this ruling also apply if the goods are being exported to the USA?

Hi S Newbold,

I would advise reading this guidance here:
Information on exporting to United States of America from the United Kingdom
Or you can contact Customs and International trade helpline on 0300 322 9434 with your query.
Imports and exports: general enquiries
Thank you. 

We are in the process to sell goods to a shop in EU but the products are in Eu already therefore not entering custom. This shop will pay us via invoice to our UK company but how do we treat the Vat issue? Do we need to price the good + 20% vat added even if the invoice will be to our UK company?

Hi Ravinder Kaur
I would advise contacting the Customs and International trade helpline on 0300 322 9434 with your query.
Thankyou.