Tax & duty liabilities - non-UK suppliers

When purchasing goods and services from outside the UK, VAT is not payable at source ie it is not paid directly to the supplier. The institution has to make separate arrangements for the payment of VAT directly to HM Revenue & Customs. The applicable rate will be equal to that which would have applied had the goods or services been purchased from a UK supplier. See Import duty and duty relief and re-importation of repaired goods.

This is an important issue because when a quotation is received from a non-UK supplier, it will appear that it is ‘VAT-free’. However, this is not the case.  Sometimes an error is made with the user assuming that there is no VAT liability at all, thus making the purchase appear cheaper.  Users must be aware that there will still be an internal charge made to the appropriate project/cost centre for the customs payment due.

Zero-rating non-UK purchases
If the goods being purchased from a non-UK supplier would normally be eligible for zero-rating in the UK (for example, they are to be used for medical or veterinary research) they should also be eligible for zero-rating from the non-UK supplier.

In order to claim the zero-rating of VAT, you must ensure that the relevant declaration is sent with the purchase order.  The physical declaration then forms part of the delivery documentation used by the supplier when exporting the goods.  It needs to be included with the delivery documentation papers so it can been viewed by HM Revenue & Customs when the goods are being brought into the UK.