VAT Refund for Overseas Businesses

Good afternoon. I would like some clarification of the VAT Legislation regarding the supply of goods, in this case second-hand vehicles, sold to a business that is established in the EU or another country outside of the UK. The VAT Guide Notice 700, states that in this scenario, the VAT treatment is that where the goods (vehicle) are to be removed (exported) from the UK and proof of exportation is available, no VAT is chargeable. If no proof of exportation can be provided, then VAT is chargeable. We have sold a VAT Qualifying second-hand vehicle to a customer located in Ireland; no proof of exportation was provided at the time of purchase. The purchase took place via our auction website and VAT has been charged on the sale of the vehicle. Various parts of the VAT Legislation, states that goods must be physically exported from the UK and evidence of export must be obtained to support zero-rating supply otherwise the goods are subjected to standard rated VAT. We have correctly charged the customer VAT at the time of their purchase of the vehicle. We do not get involved in the exportation process of vehicles purchased from our auction website, we have customers/buyers located across the world using our platform and we do not have any details of what happens to the vehicles after they are collected from our yards or delivered to an address supplied by a buyer, as such where a VAT qualifying vehicle is sold VAT is charged at the standard rate of supply as no proof of exportation is supplied. We have advised all our customers where this applies, that they can reclaim the VAT direct from HMRC using the VAT65a form as per the guidance provided by HMRC. To have a better understanding of this process, could you please advise us where we went wrong so we can advise our customers correctly. In addition, if the overseas refund scheme cannot be used for VAT on goods that have left the UK, could you please let us know the correct procedure for reclaiming the VAT so we can pass on correct information to our customers. Thank you. Regards Annie

Hi Annie-Lee Cox,
If goods are exported from the UK overseas and the appropriate conditions are met then they should be zero rated.
Please see the guidance below:
Conditions and time limits for zero rating
However, if evidence is not obtained and kept by the supplier then you can not charge VAT at the zero rate .
If the VAT is charged in this scenario then the VAT can not be recovered by the overseas business as it rules out goods exported from the UK in the following guidance:
Refunds of UK VAT for businesses established outside the UK
The only option is for evidence to be obtained for the exported goods so that the VAT is not charged by the supplier.
Thank you.