The three appellants in Global Foods Ltd and others4 each traded in alcohol. Excise goods held in bonded warehouses in the UK were exported to bonded warehouses in the Netherlands, where they formed part of the stock of the appellants’ Dutch operations. None of the Dutch businesses were VAT registered at the time the goods were acquired. The appellants deemed these “self supplies” (supplies in the course or furtherance of the business: paragraph 6, Schedule 4, VATA), treated the exported goods as zero-rated, and filed repayment returns.

HMRC argued that the self-supply was zero-rated only if the Dutch businesses were registered for Dutch VAT. As they were not so registered, HMRC withheld payment of the input tax claimed. The appellants sought retrospective registration in the Netherlands and once complete, HMRC paid the input tax claimed.

The appellants then claimed repayment supplement in respect of the withheld sums and the matter proceeded to the First-tier Tribunal (Tax Chamber) (FTT). The parties identified preliminary issues which centred around the question of whether an exporting trader was required to be registered for VAT in the member state to which the goods are exported in order for the supply to be zero-rated.

FTT’s decision

HMRC relied on case law and a contextual reading of Public Notice 725, to support its position that registration was required. The FTT, following detailed analysis of the relevant provisions, disagreed. In Vogylandishe Strassen-Tief-und Rohrleitungsbau GmbH Rodewisch v Finzamt Plauen5 (VSTR), which dealt with circumstances where a trader was not able to satisfy the condition (in that case, obtaining and recording the VAT registration number of the customer), the CJEU found that the VAT exemption was available even though the trader could not meet the requirement of the domestic regulations, provided he had done all that could reasonably be required to provide information demonstrating that the customer was a taxable person acting as such.

In the instant case, however, the FTT construed the first condition in paragraph 4.3 of Public Notice 725, as irrelevant to self-supplies:

“A supply from the UK to a customer in another EC Member State is liable to the zero rate where … you obtain and show on your VAT sales invoice your customer’s EC VAT registration number, including the 2-letter country prefix code …”.

This was not a case where the law imposed an impossible requirement for the relief, rather, it was a case where the law did not impose any requirement. The FTT agreed with the earlier decision of the VAT and Duties Tribunal in the case of Centrax v HMCE6, that the first condition did not apply to self-supplies.

Further, the FTT concluded that HMRC’s position on registration went beyond the obligations imposed by the Principal VAT Directive, which required only that the acquisition be by a taxable person.

The FTT said that even if it was wrong in its analysis and the first condition was to apply to the appellants, it would find that the principles in the VSTR case would apply. The requirement imposed under the Principal VAT Directive is that the person is a taxable person, not that

it is VAT registered. Accordingly, assuming Dutch law required the appellants to register   their Dutch business establishments with effect from the acquisition of the imported goods, the appellants’ Dutch business establishments were taxable persons. In the view of the FTT,  no additional measures would be needed for the appellants to establish their status as taxable persons in the Netherlands and they would satisfy the criteria established in the VSTR case.


Although it is unlikely that the circumstances in this case will be often repeated, it provides useful guidance on the scope of registration requirements and the importance of ensuring that legislation and guidance material does not impose burdens which go beyond the requirements of the Directive, particularly since such requirements inevitably lead to higher costs to business.

To read the decision click here.