With the absence of routine fiscal controls under the Single
Market the risk of diversion of goods either into the UK or free
circulation within the EC increases, with the subsequent potential
loss of VAT either in the UK or in another member State. EC mutual
assistance agreements require each member State to ensure that
goods for free movement in the EC are properly documented.
No single document is essential as proof that goods have been removed to another member State. The evidence held by the supplier must clearly show that the goods have been removed from the UK, not just that a supply has taken place.
Evidence of removal is to be based on the documents and information that the supplier would normally obtain in the course of their intra-EC business. The ’basket of evidence‘ produced should be considered on its merits; for instance, proof of payment in foreign currency alone would not be considered adequate evidence as payment can be arranged in any currency.
Notice 725 - The Single Market gives details of the types of documents available to evidence removal of the goods from the UK.
The European Court of Justice (ECJ) ruling in Teleos PLC established that, in certain limited circumstances, a trader retains the right to zero-rate a supply even if evidence he has relied on in good faith turns out to be unsatisfactory. Full details of the Teleos case, and how this impacts on evidence of removal to support zero-rating, are given at VEXP70400.
The supplier must ensure that they obtain and keep satisfactory evidence of removal of the goods from the UK within 3 months of the date of supply, or within 6 months for goods involved in processing or incorporation before removal.