Trading with the EU post 31 December 2020
This document is a brief summary of the key changes in respect of VAT that will happen now that the UK has left the EU.
There are some details that are still not finalised, and there may be some further changes to procedure as we move forward into 2021. Please review the Gerald Edelman Insights section on the internet for updates over the coming weeks.
Intangible services (such as those provided by accountants, solicitors and other professionals) to EU customers will be outside the scope of UK VAT regardless of whether the customer is business or private.
Suppliers of digital services will no longer be able to use the VAT MOSS service on their UK VAT return but can continue to use the simplification if they register elsewhere in the EU.
The reverse charge will still apply to bought in services from outside the UK.
If clients are involved in (VAT exempt) financial services to clients outside the UK, they may be entitled to full input tax recovery, previously this only applied to non-EU overseas clients. These supplies would be outside the scope of UK VAT, if they are not already registered for VAT, it may prove beneficial to be so.
There is a choice of postponed VAT accounting which requires access to the Customs declaration service. This will be useful for cashflow and you can access it via the HMRC portal. Alternatively, C79s (Certificate of Import) can still be used.
In respect of declarations there is a transitional arrangement until 30 June 2021 that allows simpler declarations to be made for imports. From 1 July a full Supplementary Declaration should be made. Authorisation for both SD and SDP conditions need to be met and prior authorisation is required.
Intrastat will be required for imports over a certain value.
A Duty Deferment account may also be required and this needs to be applied for in good time, and of course an EORI number should be obtained.
For anyone who has no previous involvement with imports from outside the EU, we would suggest that most businesses should appoint an agent to deal with import declarations as they can be very complex. In any case, any non-established businesses in the UK must appoint a representative to deal with their UK VAT registration obligations.
From 1 July 2021, there will be a new EU system (OSS/IOSS) that may require a UK business, selling goods to the EU, to register in only 1 EU country and submit declarations for sales to the rest of the EU via IOSS.
Goods can be zero-rated on export, but detailed records and documents must be maintained to support this. Again, an EORI number will be needed.
Export declarations will be required and again we recommend that a Customs agent is obtained.
Businesses will no longer be required to complete EC Sales Lists or Intrastat declarations for dispatches.
Also note that for exports into the EU VAT will be levied as the goods cross the border. If the customer is the importer of record, they will be due to pay VAT and any duty. A pragmatic approach may be for the supplier to treat the customer as the importer of record but pay the taxes on their behalf, with those taxes being shown within the sale price.
From 1 July 2021 the above can be simplified by registering for VAT in one EU country and using a new scheme called Import One Stop Shop. Further details, when we receive them will be announced on the Gerald Edelman Insights section.
Retail Export Scheme
This is where overseas visitors can buy goods VAT free to take home. It will be abolished (except in NI).
Much of the above will not apply to Northern Ireland that will remain in both the single market and the Customs Union at least in the short term. It will also remain in the United Kingdom Customs area and the UK VAT system.
Northern Ireland will have few restrictions in respect of sales and goods and services to both the UK and the EU, indeed there will be little change.
For supplies of services from Great Britain these will still attract UK VAT but for goods there will some additional checks, and HMRC have a dedicated Trader Support Scheme which will complete declarations on behalf of GB businesses.
Your EORI number
There is now a portal where businesses can check if they have a registered EORI number. You can access the portal here. For EU VAT numbers, you can use the existing VIES portal here.
This is meant as a quick guide only as it is almost impossible to summarise all that is changing and will be required by businesses, large and small, from 1 January 2021.
For further information, you can view our presentation which summarises the key changes as we understand them so far.
All businesses are different and their circumstances specific to them. If in doubt, please contact the VAT team at VAT@geraldedelman.com. 2021 certainly looks like an ‘interesting’ year.