Import VAT on services

Is it possible to reclaim import VAT for repair services ( goods do not belong to the Company anymore, they were other sold before and are repaired under contract or end customers without insurance contract ask for repair or put into free circulation after repair? I have seen that there was brief notice 15 in 2020 stating that there will be change for reclaiming VAT upon repair which is no longer available on the website. Can you please give more insight?

Hi ysa6pisz,

I can see that customs brief 15 has been removed..
So once the goods are imported in to the UK do the goods not get sent back overseas?.
Who is the importer of record of the goods being imported in to the UK?.
Do you use any special customs procedure for importing the goods for repair,eg Import goods Relief?

Thank you.

In general we have three scenarios for these repairs services. • Scenario 1 – Original goods sold to customers include a standard manufacturer warranty. The standard manufacturer warranty is effectively subject to VAT as part of sale of goods. If the repair is covered by the standard manufacturer warranty, no charge is made by us to the UK customer for the repair. Goods are sent to NL for repair and no charge is currently made by us and our branch in NL for repair services . We are responsible for exporting the goods to NL and for dealing with the re-importation of the repaired goods into the UK. • Scenario 2 – Customer purchases a separate Gold contract (which we understand is subject to VAT). If the repair is covered by the Gold contract, no charge is made by us to the UK customer for the repair. No charge is currently made by NL branch to us for repair services . We are responsible for exporting the goods to NL and for dealing with the re-importation of the repaired goods into the UK. • Scenario 3 – Customer may require a repair to goods ( which were previously bought from us) that it owns, but the repairs are not covered by a standard manufacturer warranty or Gold contract. We charge VAT on the repair services carried out for the customer. The goods are shipped from UK customer to Netherlands for repair and NL issues an invoice to our branch in UK. We will account for VAT via the reverse charge mechanism. We will be responsible for exporting the goods to NL and for dealing with the re-importation of the repaired goods into the UK. For scenario one we use IPR. For scenario 2 we have applied for OPR however we were advised by external tax advisor that we have no right to reclaim import VAT on service cost and freight. For scenario 3 we also do not reclaim VAT for repair cost and freight. As in all scenarios the goods we have already sold do not belong to us anymore. The ownership was transferred to third party. Thus, are we in position to reclaim the VAT from repair service and freight? Is the manual https://www.gov.uk/hmrc-internal-manuals/vat-input-tax/vit13300 effective? Thank you.

As HMRC say the Revenue & Customs brief 15/2020 has been with drawn - this is usually when the information it contains is now included in guidance. In short the brief was a reminder that only the owner of the imported goods is entitled to recover the import VAT ( as input VAT). It gave specific examples of where this could be an issue including companies importing customer owned products for repair. Assuming you are going to re export the repaired goods back to the owner it is possible to mitigate/ suspend the import VAT (and any import duties) by using a customs duty relief called inward processing. If you are regularly importing goods for repair or a single shipment is valued over £500,000 then a prior authorisation will be required from HMRC. If the imports for repair are infrequent then you are permitted to import up to three times in a rolling 12 month period without prior authorisation https://www.gov.uk/guidance/apply-to-delay-or-pay-less-duty-on-goods-you-import-to-process-or-repair. Alternatively the owner can be the importer and if registered for VAT in the UK would be able to reclaim the import VAT subject to normal rules.

Hi ysa6pisz,

Yes I believe the guidance stated would be relevant for the recovery of import VAT

VIT13300 - VAT Input Tax basics: recipient of supply

With regards to recovery of VAT for other services then please see the guidance below:

10. Introduction to input tax

As regards customs processes like IPR and OPR I would recommend speaking to our Customs Helpline on 0300 322 9434

Thank you.