VATRESNI6350 | Assurance at the retailer: Business purpose

The question of whether the VAT retail export scheme can be used when exporting for business purposes was considered in a tribunal case: G K Electrical (UK) Ltd (MAN/87/198). The case was of particular interest for the courts view of what constitutes business purpose.

This case concerned an assessment raised against a retailer because the retail export scheme forms held to support zero-rating were unsatisfactory. A number of retail export scheme forms had not been properly completed, and the quantities exported were such that we considered many of the consignments to be by way of business.

The tribunal accepted our view and dismissed the appeal, but it did not get into the detail of defining quantity limits for personal exports. In reaching their conclusion the tribunal gave the natural meaning to “business”, although expressing reservations as to the practicality of the result. The decision indicated that, to succeed in their appeal, the company needed to prove that the alleged export sales had been in accordance with the conditions specified in Notice 704. This they had not done, the Chairman concluding “that the burden lies on the appellant of convincing us on a balance of probabilities that the Commissioners assessment is wrong. It has failed.”