VAT and Brexit

B2B buying and selling goods to EU

Buying goods from EU at the moment

  • UK Co gives EU Co it’s VAT number
  • Goods move from EU to UK VAT and duty free
  • French supplier zero rates the supply
  • UK Co does the acquisition tax in box 2 and accounts for input VAT, so no impact
  • French Co completes an EC Sales list

 

Selling goods to EU at the moment

 

  • EU Co gives UK Co it’s VAT number
  • Goods move from UK to EU VAT and duty free
  • UK supplier zero rates the supply
  • EU Co does the acquisition tax in box 2 and accounts for input VAT
  • UK Co completes an EC Sales list

 

B2B buying and selling goods outside the EU

 

Buying

 

  • Good arrive in the UK and are declared for both VAT and customs duty
  • UK importer pays the VAT
  • Importer needs to get a C79 document and then claims input VAT on the next VAT return
  • There could be a timing difference in paying the VAT and then claiming it back
  • However, if we leave the EU with no deal then HMRC will bring in postponed accounting so that the importer will not pay and reclaim VAT. Instead, both the VAT paid and the reclaim will be added to the VAT return and netted off (the Reverse Charge)

 

Selling

 

If you sell goods to a customer inside the EU after Brexit then VAT is not normally charged on the sale.

 

Assistance for when we leave the EU

 

EORI number – if you deal with no EU countries you probably have one of these now. If you have only dealt with the EU in the past then you should get one of these in readiness for leaving the EU.

 

The EORI number will help with Transitional Simplified Procedures for moving goods in and out of the EU.

 

Our advice is to get an EORI ASAP.

 

https://www.gov.uk/eori

 

https://www.gov.uk/guidance/register-for-simplified-import-procedures-if-the-uk-leaves-the-eu-without-a-deal

When we leave the EU the EC Sales list will go.

Goods B2C

 

The current situation is if the customer is not VAT registered, then UK VAT will be charged just like other sales. This is known as a distance sale; each EU country has a VAT registration threshold for distance sales. If you breach this distance selling threshold to another EU country, you’d normally have to register for VAT there too and start charging local VAT rather than UK VAT.

 

After Brexit you would invoice with a zero rate, but the EU customer will need to account for the VAT as the goods will be subject to VAT and customs duty in that EU country.

 

Services

 

A no deal Brexit will by and large leave VAT on services unchanged.

 

Reminder of the rules now (assuming the customer is VAT registered)

 

  • Place of supply is where the customer is based
  • Reverse charge mechanism exists which shifts VAT obligations to the customer
  • So no VAT is charged (zero rated)
  • The customer then accounts for the VAT using the reverse charge by 1) charging themselves the VAT 2) then recovering the VAT on the next return (merely an accounting adjustment).

 

So, if you provide services to a customer in France you would invoice them with a zero rated invoice.

 

If you buy services from Italy, then they would bill you zero rated. We would then apply the reverse charge on your VAT return as described above.

 

If the customer is not VAT registered then the place of supply is where you are and therefore UK VAT is applicable. So, if you have a customer in Holland then you would bill him/her and add VAT to your invoice.

 

If we leave the EU with no deal then the above will remain unchanged for services.

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