Goods received from France on approval

The general rule when goods are moved from France to the UK is that they are treated as imports, and a VAT-registered UK business which receives them has to account for UK VAT on their value.

Goods from France may be received by a UK business on approval, or some other similar sale-or-return basis. The UK business has the right to return the goods at any time, and until they are accepted, they remain the property of the French supplier. There may alternatively be a time limit, after which time the UK business is deemed to have accepted the goods.

Under such an arrangement, the goods are not treated as standard imports of the UK business for VAT purposes until they are accepted. The French business will have to treat them as a transfer of own goods. It is likely that the French business will have to register for UK VAT, and then account for VAT on the value of the imported goods. It will then charge the customer UK VAT when the goods are accepted, which the UK business can reclaim subject to the normal rules for reclaiming input VAT.