Can a freight forwarder charge a client for VAT on imported goods, which the client had assumed were zero-rated?
Q: My client has imported some goods and gave its EORI number to the freight forwarders for the import paperwork. The freight forwarders have now invoiced my client for their services and on a separate line they have invoiced for 'VAT & duty'. I thought their services would be zero-rated as relating to imports, so why have they charged my client this VAT?
A: At import, someone must pay any import VAT and customs duty due for the goods for them to be released. Where a freight forwarder pays this on a client's behalf, it is normal for the freight forwarder to recoup this from the client as a disbursement line on their invoice; this is not additional VAT being charged to the client, but simply the freight forwarder requesting reimbursement for the monies it has paid out on the client's behalf. As long as the freight forwarder quoted the client's EORI number on the import declarations (C88), the client should receive a C79 certificate in the following month showing the import VAT suffered by it on these goods. This C79 certificate acts as evidence of the VAT incurred for VAT recovery purposes, enabling your client to recover the import VAT on its next VAT return (subject to normal VAT recovery rules).