International Indirect Tax Mistakes: Costing Businesses Millions

• Businesses often lack understanding of international indirect tax rules.
• Common errors include overclaimed or underpaid VAT, unforeseen overseas VAT registrations, and insufficient evidence for zero-rating export sales.
• UK businesses are facing issues with Customs Duty, particularly regarding correct classification and country of origin.
• Businesses may not have the resources or skills to address these issues, leading to Tax Authority reviews and goods being held up at borders.
• Common issues include:
• Mistakenly recovering VAT on imports for goods not owned by the business.
• Drop shipments leading to unforeseen overseas VAT registration.
• Supply and install contracts potentially generating overseas VAT registration obligations.
• Incorrect import/export documents.
• Assigning incorrect classification codes or country of origin.
• Mistakes by freight forwarders and customs agents.
• Consequences of non-compliance include HMRC assessments and penalties, cash flow issues, delays at borders, returned goods, and commercial problems.
• Internal communication between departments is crucial to minimize issues and ensure compliance.

Source: scottishfinancialnews.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.

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