Import Agents and VAT Recovery

There’s been a noticeable growth in our support to businesses dealing with the importation of goods into the UK and therefore it was of interest to read the First Tier Tribunal case in respect of Scanwell Logistics. It’s a case that relates to pre-Brexit trading but illustrates what is proving a key theme for VAT issues today – what are the terms under which an agent is acting in respect of import activity it engages in?

Scanwell was appointed to act as “import agent” in relation to the import into the UK of several consignments of goods from China between 2014 and 2017. When the goods were released to it, it arranged their onward transport to other countries in the EU. Scanwell made import declarations in which it claimed exemption from import VAT under Onward Supply Relief (“OSR”). HMRC decided that OSR was not available on these imports and made a VAT assessment on Scanwell of some £5.7m in November 2017. Scanwell appealed, unsuccessfully, against this assessment on the grounds that it was entitled to OSR.

The case rests around the right of Scanwell as an undisclosed agent or otherwise to be able to transfer the title in the goods for which it had acted as the import agent, which points to the need to understand the nature of contracts and the importance of ensuring the approach to drafting any commercial contract builds in the VAT implications. Contracts aren’t just about operational issues they clearly affect the VAT interpretation of the situation to which they refer.

There was an alternative route to importing these goods – the Community Transit system – which would have removed the issue of a claim under OSR.

In terms of current VAT issues arising on importations – ownership at the point of import has been an aspect which has cropped up, particularly on larger value transactions where installation and confirmation of commissioning prior to the transfer in title has arisen.

How do I deal with Import VAT remains a question therefore and if you should need help in this area, please get in contact with your usual Centurion VAT contact or emailus@centurionvat.com

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