VAT Retail Export Scheme
There is a special VAT refund scheme called the VAT Retail Export Scheme or Tax-Free Shopping that allows individuals not resident in the EU to obtain a VAT refund on goods bought in the UK and taken out of the EU. The scheme does not apply to services, for example hotel bills.
The Government announced at Budget 2013 that a consultation would be launched looking at making changes to the scheme. The consultation was closed in 30 September 2013 but respondents broadly agreed that a digital solution would be the most appropriate. HMRC has been exploring digital systems in operation in some other EU Member States to help determine what sort of system would be most suitable for the UK. In the interim there are expected to be some changes to the claim form, identification required and processes for claiming at airports and ports. To allow businesses time to make any necessary systems changes (for example, to the layout of the claim forms), some changes will take effect after summer 2014.
Currently, the scheme is not available in all shops but can be used to reclaim VAT on purchases for participating shops except for the following:
- Goods which have been used, or partly used, in the EU.
- Motor vehicles and boats.
- Goods over £600 in value that will be exported for business purposes.
- Goods to be exported as freight and goods that need an export licence.
- Unmounted gemstones and bullion.
- Mail order goods including internet sales.
There are a number of conditions that must be met in order to claim the VAT back including the requirement to leave the EU within three months of making the purchase. Most participating shops have different minimum purchase conditions, usually around £75 in any one shop. A special form (VAT 407) must be completed and this must be presented with the goods and receipts to customs when leaving the UK.