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Introduction

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Where a business sells goods and delivers these goods to a customer in the UK,  the VAT liability will depend on how the contract is worded and whether delivery is inclusive of the price of the total goods or separately charged.

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The service provided will either be a: 

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• Supply of Delivered Goods

• Supply of Delivery Services

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Goods Delivered with no Separate Charge for Delivery

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Where a business sells goods and delivers them to its customers,  if there is no separate charge for delivery or it is free, then Standard Rated VAT of (20%) applies to the total selling price.

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Goods Delivered with a Separate Charge for Delivery

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Where a business contracts to sell goods including delivery, then a single supply of delivered goods has been made.  If a separate Delivery charge for delivery is made or itemised on an invoice separately, then the liability will still follow that of the underlying goods. 

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Fore example, If the goods are Standard Rated then the Delivery charge will be Standard Rated. 

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Delivery is not Required Under the Contract or I am delivering someone else's Goods

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Where goods are delivered under contract and delivery is not required under that contract but it is agreed separately to deliver the goods,  then this is not a single supply of delivered goods.  Any separate charge for delivery will be Standard Rated 20%. 

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This will also be the case where goods belonging to someone else are delivered and a charge for delivery is made. This charge will be Standard Rated 20% 

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Charges for Packaging

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Any separate charge for packaging will also be Standard Rated (20%)

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Freight Transport and Haulage

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The VAT liability of Haulage Services (falls under Freight Transport Services for VAT) where goods and a Vehicle (normally a van or lorry) and a driver are supplied to transport goods will depend on a number of factors as follows:

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• Whether the customer is a Business Customer or Private Customer

• The Place of Supply

• Whether the Haulage is carried out directly or services are contracted out

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Freight Transport and Haulage For Customers in Business

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The Place of supply of Haulage services for a customer in business will be where the customer belongs. Follows the General Rule for the Place of Supply for Business Customers.  So if a UK haulage business is contacted by a UK customer to deliver goods in the UK then then the place of supply is the UK as that's where the customer belongs. The haulage services will be Standard Rated 20%. 

 

However where the place of supply would normally be the UK under the General Rule because the business customer is located in the UK, but the actual haulage takes place outside the UK, then the place of supply is where the haulage is performed.  

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For Example - If a UK haulage company is contracted by a business customer who is located in France and the haulage takes place in France then the place of supply is France and the service is Outside the Scope of VAT but with associated input VAT recovery. (Hence UK Input VAT incurred by the UK Haulage firm on costs associated with this contract is recoverable from HMRC) 

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Freight Transport and Haulage Where the Haulage Firm is a Sub-contractor

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Where the business supplying the haulage has been engaged by another haulage firm to provide services to their customer, the place of supply will be where the principal haulage firm is based. 

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For Example - If a haulage firm in France contracts with a haulage firm in the UK on a subcontracted basis to provide transportation to a customer based in the UK, the subcontracted haulage firms supply will be outside the scope of UK VAT as its supply is to its customer the principle haulage firm. 

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Freight Transport and Haulage For Non Business Customers

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The place of supply of Freight / Haulage where the customer is a private individual and not a business customer is as follows:

 

• Transportation occurs in the UK = UK place of supply and Standard Rated 20% VAT

• Non UK = Place of supply = Country where haulage / transport occurs 

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Zero Rated Freight Transport and Haulage where goods are moved from the UK or to the UK

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Where a UK haulage firm provides a transport of goods service from:

• A place within the UK to a place outside the UK and the actual place of supply is the UK as the customer is in the UK, then this service will be Zero Rated. 

• A place outside the UK to a place within the UK and the actual place of supply is the UK as the customer is in the UK, then this service will be Zero Rated. 

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Freight Transport and Haulage Provided to a UK Business Customer

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Where a Transport of Goods Service is provided by a non UK firm to a business customer in the UK to move goods in the UK, then Reverse Charge VAT will be applicable in the UK under the normal Reverse Charge VAT rules. (See Reverse Charges for more detail)

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-Contains public sector information licensed under the Open Government Licence v3.0.

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