The taxpayer registered for VAT on 1 May 2014. Its main activity was to sell luxury goods through two websites mainly to individuals in China.
The January 2017 VAT return showed a repayment for £48 474. HMRC considered the export evidence needed to support zero-rating was inadequate both in terms of quantities shipped and the description of the goods. The company director admitted that the paperwork sometimes incorrectly described and undervalued the goods to circumvent problems with the Chinese authorities but also to reduce the risk of them being stolen in transit.
HMRC issued an assessment to treat the goods as sold in the UK because there was no suitable evidence that they had been exported.
The legislation gives HMRC the power to specify the evidence required in order for exports to be zero rated (VATA 1994 s 30(6)) and this evidence is outlined in VAT...
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