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Q: A client, who usually sells goods within UK, has now won a contract with another UK VAT registered business to sell goods to them, but they are being sourced from China. Apparently, the goods are sent direct to the client’s customer in Australia. Is this an export? How should it be treated for VAT purposes in the UK?

A: No. This is not an export from the UK as the goods were not in the UK when the supply of them was made. As per paragraph 4.8.2 of Notice 700 (General VAT guide) the "Place of Supply of Goods" is where they are when the supply is made (or possibly where they are imported) and so this would be China or Australia and the sale therefore outside-the-scope of UK VAT. Advice may be needed in China or Australia but the only requirement in the UK would be to record the sale in box 6 of the UK VAT return as a sale or other output with no UK VAT to be declared in box 1 of the return.

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These publications from Markel Tax were correct at the time of going to press and should be considered as principles-based guidance only. To check current validity, call the Markel Tax helpline. ICAEW (as distributor) disclaims all liability for any errors or omissions.

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Markel Tax offers expert advice on UK tax and VAT via its helpline and provides monthly FAQs with questions and answers on common tax issues for businesses and practitioners.

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