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All I want for Christmas is a VAT-free designer handbag!

Gareth Bevan 27 October 2017 No comments

Well if you are a member of the US forces based in the UK then your wish could come true!

For many UK businesses it is probably a little known fact that you can sell most goods and services costing £100 (inc VAT) or more to a member of the US forces or their family based in the UK VAT-free. Further to an agreement between HM Revenue and Customs and the United States Force (USF), a tax-relief programme exists under the authority of Customs and Excise letter Priv 46/7 dated 9 September 1974. Under this US “VAT-free purchase scheme” members of the USF who meet the eligibility requirements can benefit from VAT-free purchases of goods and services for their personal use from UK businesses.

There are strict, though not onerous, procedures that must be followed when applying the VAT relief. The supplier must first provide the buyer with a written quote stating the price of the goods or services (excluding VAT). The quote, and any invoice, must be addressed to a named member of the US visiting forces. The buyer must then give the supplier a US government cheque and two copies of a US Forces VAT-Free Purchase Certificate that has been signed by an authorised signatory of the US visiting forces. The supplier must sign one copy of the certificate and return it to the buyer and keep the second copy of the certificate with his VAT records as evidence should HMRC require proof why VAT was not charged.

This is however an entirely voluntary scheme. If a business does not wish to participate that is fine and VAT should be charged in the normal way. For businesses located close to a USF base in the UK though, implementing the scheme could be a good way to improve your competitiveness and boost pre-Christmas sales. Now would be the ideal time to start promoting those luxury goods at a VAT-free price to those who qualify and if you are a member of the US forces then look out for that VAT-free designer handbag now!

Further information on VAT reliefs for visiting forces can be found here. Contact us if you require further details on implementing the scheme.