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VAT on call-off stock arrangements

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Finance Bill 2020 introduced legislation to implement the new EU rules simplifying the VAT treatment of call-off stock arrangements with effect from 1 January 2020 (one of the so-called VAT ‘quick fixes’).

HMRC has updated its guidance on the draft legislation, first published in December, with a new paragraph concerning ‘small losses’ (meaning 5% or less) of goods destroyed, lost or stolen, which may be disregarded for deemed acquisition purposes.

Call-off stocks are goods transferred by a supplier from one EU member state to another, to be held in the state of destination pending delivery (call-off) to an individual customer whose identitiy is known. Title and ownership of the goods remain with the supplier until call-off. The existing treatment gives rise to a deemed supply in the state of origin and a deemed intra-community acquisition in the state of destination, meaning the supplier has to become VAT-registered in the state of destination, followed by a ‘domestic’ supply to the customer in the state of destination when the goods are called-off. The new rules provide for a single intra-community supply of goods at the point when the goods are supplied to the customer in the destination state.

HMRC has also added ‘force of law’ paragraphs to VAT notice 725 ‘The single market’ in relation to reporting of call-off stock arrangements (paragraph 17.11) and the 3-month time limit for providing evidence of removal of goods from the UK (paragraph 4.4). 

Issue: 1484
Categories: News