- Procurement International Ltd (PIL) supplies goods to customers who run reward recognition programmes on behalf of their customers, who in turn wish to reward their customer and/or employees. The reward programme operators (RPOs) provide a platform through which rewards can be chosen. Those operators then place orders with PIL for the goods requested.
- HMRC formed the view that PIL had incorrectly zero-rated certain supplies. It therefore issued VAT assessments to PIL. PIL appealed to the FTT.
- The FTT had to determine whether the supplies made by PIL which it had treated as zero-rated, were properly zero-rated. Those supplies were made outside the EU prior to 31 December 2020 and outside the UK from 1 January 2021.
- Both parties agreed that PIL supplies goods to the RPOs, which are then delivered directly to the reward recipients outside the UK. The goods meet export documentation requirements and all deliveries were handled by PIL’s agent, United Parcel Service, under DDP/DAP terms. PIL retained economic ownership and risk until delivery.
- The FTT concluded that PIL’s supplies involved the removal of goods to a place outside the UK, making them zero-rated exports. PIL arranged and paid for transportation and the RPOs did not control the movement of the goods. The supplies were not indirect exports requiring RPO involvement. The appeal was therefore allowed.
- Why it matters:This case demonstrates the importance of ensuring that contracts record clearly the parties’ respective responsibilities. This will assist in determining the parties’ obligations and the VAT consequences which flow from those obligations.
Source: rpclegal.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
