VAT procedures have changed since Brexit. Don't let them catch you or your clients out! Here are five things you may not have been aware of:
1. If trading in goods, Northern Ireland is effectively an EU member
There is now an imaginary customs border between mainland Britain and Northern Ireland (NI), located in the Irish Sea. Goods moved from 'Great Britain' to NI are subject to customs declarations and possibly duty if they are 'at risk' of being sold onto the EU. This is largely due to the open border between NI and Ireland.
Furthermore, EU VAT rules apply to goods moved to or from Northern Ireland to EU member states. Make sure you're up to speed with them and remember, 'GB' goods, 'UK' for services.
2. Goods shipped from Britain to an individual anywhere in world are now zero-rated for UK VAT purposes
It no longer matters what country the goods are going to; in the eyes of UK VAT they are an export. The exporter must keep proof of shipment and all relevant commercial documentation as evidence for the zero rating. And note that the goods will still be subject to import VAT and possible duty if they were originally manufactured outside the EU.
Where the shipment value is €150 or less, there may be changes to this rule with the upcoming introduction of the IOSS scheme - keep an eye out for it.
3. Any British business which buys and sells goods in an EU country must register for VAT in that country
This is regardless of whether the goods are leaving the EU country in question or not. This is because a zero-registration threshold applies to an overseas business making sales in an EU country. But, assuming the final buyer is VAT registered too and able to claim input tax, the VAT should not be a cost to any party in the transaction.
4. Postponed VAT Accounting (PVA) can now be used for goods imported from anywhere in the world not just the EU
The VAT rules for EU and non-EU goods are now the same, meaning any VAT-registered importer can elect for PVA on arrival of goods. This will defer the required VAT payment and allow it to be accounted for in their next VAT return with a reverse charge calculation. The only requirement is to have a GB EORI number organised before the goods arrive.
5. Selling electronic services B2C into the EU? You now need to charge VAT at the rate relevant to the customer’s country NOT the UK rate
This only applies if the customer is a non-business and if the service involves 'minimal human intervention' and is 'heavily reliant on the Internet' for its delivery, e.g. a software download.
If this is the case, then the UK business must register for the non-Union MOSS scheme in an EU country of its choice, so it can charge and declare the VAT collected on electronic sales made in the different EU states.
If any of these came as a surprise, you may be interested in the 2021-22: UK Tax 4-hour course or, for even more in-depth information as it happens, the Tax Updates Programme 2021.
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