Originally Posted by
Disco Volante
I'm genuinely confused as to the distinction you seem to be drawing here (you may be right, but I don't understand at the moment).
Isn't it like this?
If a passenger is travelling to a country outside the EU, he is entitled by UK law to purchase goods duty and VAT free. In these circumstances, the retailer does not charge VAT on the sale.
If the passenger is travelling to a country in the EU, he is not entitled to purchase goods duty and VAT free and the retailer is required to charge VAT and duty on the sale, and in turn must pay the VAT to HMRC.
In order to know whether to charge VAT on the sale or not, the shop needs to know where the passenger is travelling to. The shop finds this out by asking to see the boarding pass and recording the flight number, which shows whether the passenger is travelling to an EU country or not.
If the flight number reveals an EU destination, the retailer charges VAT (unless the item is zero-rated) and pays the VAT to HMRC. If it doesn't show an EU destination, the retailer does not charge VAT.
Isn't the retailer entitled to look at a boarding pass to find out whether the passenger is travelling to an EU destination or not? Does it not need this information to prove to HMRC that a particular sale was duty free and that therefore no VAT is due on the sale?
I think this is right, but if part of it is wrong, I would be interested to know which part. You seem to draw a distinction between goods that are going to be exported and those that are not, and I don't follow why this is relevant.
What am I missing?
Sorry, I've not really been very clear, have I.
I am drawing the distinction because HMRC suggest, in their guidance, that a retailer can zero-rate the supply of goods made from an 'airside' duty or tax free shop where:
:- the traveller is departing directly to a destination outside the EC, and
:- the goods are to be exported.
Exported goods being for 'consumption' outside of the EC, then (if I understand all this correctly) I can think of at least three examples, off the top of my head, where a passenger with a boarding pass for a direct flight from Heathrow to a destination outside the EC may not actually be "exporting" goods (and hence unable to satisfy both requirements).
1) If a UK citizen/resident on a trip to (say) the USA buys goods airside on their outbound journey, as personal property, and they intend to bring the goods back to the UK with them on their return home.
2) If (just for instance) a Greek citizen/resident is ticketed on a route back home to Greece something like London-Zurich-Athens (in transit only at Zurich) buys goods airside at Heathrow as personal property and intends to take the goods back to Greece with them.
3) Somebody ticketed to a non-EC country buying goods that they then gift to a friend who works in the airport and happens to be on duty airside that day. You meet for coffee and say something like "here, i got you a little something to thank you for looking after the kids the other week..".. (However unlikely this might be)
Please note that I am not suggesting in any way that any retailer is doing anything other than in full compliance with the relevant regulations etc and agreements that they will (I have no doubt) have in place with HMRC.
This is, in fact, a personal concern about my own potential liability for tax which is actually illustrated best in example 1.
Simply, if I were to buy something like a camera or a laptop or something at Heathrow (say on the outbound leg of one of my quick trips out of the EC) then I want to make sure that I understand fully the tax status of the goods and, well, really, I do not want to be in a situation where I am unknowingly liable for import tax and/or VAT on that purchase if I bring it back with me.
This is especially relevant on goods with a value higher than the tax free allowance for coming back into the UK.
In other words, to make an informed purchase, I want to be clear on the tax status of the goods I buy as they relate to my liabilities.