Last month we received an order from Turkey on an Ex Works basis. The freight company nominated by the customer came in and collected the goods, we just did an invoice. I have recently attended an export documentation course and the trainer was concerned that we did not have evidence of export. Could you explain this in more detail for me please?

Delighted! We constantly return to this topic because a lot of traders seem to have failed to understand that HMRC (HM Revenue & Customs) are very strict about it because of the huge amount of VAT fraud which clouds the trade horizon.

Put simply your goods can be zero rated for VAT if they are being exported to a destination such as Turkey which is outside the EC, HMRC are quite content to let you zero rate such supplies but as they make clear to traders “you must be able to provide proof that the goods have actually left the community”. This proof can be provided in one of two ways Official Evidence or Commercial EvidenceOfficial evidence is required for certain classes of goods such as:

  • Export Licenseable goods
  • Goods subject to Customs control under certain regimes e.g. OPR (Outward Processing Relief) IP (Inward Processing Relief)
  • Excise goods
  • Indirect exports

Official Evidence is an appropriate shipping invoice, transport document and the C88 NES declaration showing the declaration to CHIEF (Customs Handling of Import and Export Freight)

Commercial Evidence is sufficient for normal commercial and industrial supplies and a relevant shipping invoice and transport document would be acceptable to HMRC providing the two can be reconciled by, for example showing the invoice number on both documents.

In section 6.6 of Notice 703 which is the relevant HMRC public notice they go to great lengths to point out the potential dangers of the ‘Ex Works’ Incoterm where the shipment is made by the forwarder acting on behalf of the overseas consignee. It suggests requiring the customer to provide evidence of export under the contract of supply and warning the customer that they could be liable for the VAT if such evidence is not provided. This advice may prove successful but you are putting the responsibilities on to another party who might not be as careful about compliance as you are. Why not consider FCA (Free Carrier) (Sellers premises) (Incoterms 2010) which is similar in most respects to Ex Works but would enable you to be shown on the export declaration (C88) and gain evidence of export or DAP (Delivered At Place) (Incoterms 2010) which makes you the exporter and under which you are named on the C88 as the exporter. 


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