What exception does paragraph 62 of Schedule 9ZA VATA 1994 provide to the deemed supply rules?

Paragraph 62 provides an exception to the deemed supply rules in paragraphs 60 and 61. If goods moved to a destination territory are returned to the origin territory within 12 months of arrival, and the supplier records the return in the register required by Article 243(3) of Council Directive 2006/112/EC, the deemed supply treatment does not apply.

What conditions must be met for the paragraph 62 exception to apply under United Kingdom VAT law?

Two conditions must be satisfied. First, the goods must be returned to the origin territory within 12 months of arriving in the destination territory, and the return must be carried out by the supplier or under their direction. Second, the supplier must record the return in the register prescribed by Article 243(3) of Council Directive 2006/112/EC.

What is the time limit for returning goods to qualify for the paragraph 62 exception?

The goods must be returned to the origin territory within 12 months of their arrival in the destination territory. If the goods are returned after this 12-month window has expired, the exception under paragraph 62 will not be available and the deemed supply rules under paragraphs 60 and 61 will continue to apply.

In what practical situations does the paragraph 62 exception apply to avoid a VAT charge?

The exception is relevant where a business moves its own goods to another territory for temporary use, display, or in anticipation of a sale that does not materialise, and then brings them back. Provided the goods return within 12 months and proper records are kept, the business avoids an unnecessary VAT charge on the temporary movement.

Value Added Tax Act 1994 section 62

Exception to paragraphs 60 and 61: goods returned to origin territory

Section 62 provides an exception to the deemed supply rules in paragraphs 60 and 61 where goods are returned to their territory of origin within a specified time frame.

Where goods have been moved to a destination territory and would otherwise trigger a deemed supply under paragraphs 60 or 61, an exception applies if the goods are returned to the origin territory.
The return must take place within 12 months of the goods arriving in the destination territory.
The goods must be returned by the supplier or under the supplier's direction — it is not sufficient for a third party to return them independently.
The supplier must record the return of the goods in the register required under Article 243(3) of Council Directive 2006/112/EC.

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