x-vat - blog

Brexit - VAT & Imports from the EU

12/22/2020

We are still getting a lot of queries on these points. Read our quick guide below:

Business-to-Business Imports
From 1st January 2021, businesses need to make customs declarations when importing goods from the EU (to Great Britain: England, Wales & Scotland but not including Northern Ireland).
https://www.gov.uk/prepare-to-import-to-great-britain-from-january-2021

·       A business can make the declarations itself, but can use a courier, freight forwarder or customs agent.

·       Declarations are submitted electronically through Customs Handling of Import and Export Freight (CHIEF) system.

·       From 1st January 2021, the rules for importing some types of goods will change in relation to:
       - export licences and/or certificates;
- marking, labelling and marketing standards for food, plant seeds and manufactured goods;
- alcohol, tobacco and certain oils.

·       From 1st January 2021 businesses will need an EORI number that starts with GB to import goods.
·       Businesses will need to pay customs duties and VAT on all imports.
·       In some situations, a business can delay making a declaration for up to 6 months after importing the goods.

Postponed VAT Accounting
From 1st January 2021, if a business is registered for VAT in the UK, it will be able to account for import VAT on its VAT Return for goods imported into Great Britain (England, Scotland and Wales) from anywhere outside the UK (not just from the EU).

From 1st January 2021, if a business is registered for VAT in the UK, it will be able to account for import VAT on its VAT Return for goods imported into Northern Ireland from outside the UK or EU (see Northern Ireland)

There will be no changes to the treatment of VAT or how it is accounted for for the movement of goods between Northern Ireland and the EU.

Businesses do not need to be authorised to account for import VAT on the VAT Return.

IMPORTS CHECKLIST
·       Obtain an EORI Number (GB)
·       Engage a Customs Agent or Freight Forwarder or register for the Customs Handling of Import and Export Freight (CHIEF) system for self-declarations
·       Check the requirements for import licences and/or certificates; licences are required for imports of:
-       Animals, plants, food and agricultural products
-       Drugs, chemicals and waste
·       An EC Sales List is no longer required
·       But Intrastat Supplementary Declarations are still required
(re arrivals/imports of £1.5m or more)
·       Imports are reported in Boxes 1, 4 & 7 of the VAT Return (Boxes 2 & 9 are no longer used)

0 Comments

Brexit - VAT & Exports to the EU

12/17/2020

0 Comments

It's late in the day but there is still confusion about what is needed for UK businesses to export goods to businesses in the EU. Read our summary guide below to make sure that all boxes are ticked!

Business-to-Business Exports
From 1st January 2021, businesses need to make customs declarations when exporting goods to the EU (from Great Britain: England, Wales & Scotland but not including Northern Ireland).
https://www.gov.uk/prepare-to-export-from-great-britain-from-january-2021

A business can make the declarations itself, but can use a courier, freight forwarder or customs agent.
https://www.gov.uk/guidance/customs-declarations-for-goods-taken-out-of-the-eu?step-by-step-nav=1faad9b3-e5ef-47f6-a3ba-4715e7e4f263
https://www.gov.uk/guidance/appoint-someone-to-deal-with-customs-on-your-behalf?step-by-step-nav=1faad9b3-e5ef-47f6-a3ba-4715e7e4f263

From 1st January 2021, the rules for exporting some types of goods will change in relation to:
-       export licences and/or certificates;
-       marking, labelling and marketing standards for food, plant seeds and manufactured goods;
-       alcohol, tobacco and certain oils.
From 1st January 2021 businesses will need an EORI number that starts with GB to export goods from the UK.
Exports of goods from the UK will be zero-rated for VAT.
The EU business importing the goods will also need to prepare for 1st January 2021 (for the relevant Member State).
The EU business importing the goods will have to make import customs declarations (for the relevant Member State).
The EU business importing the goods may need a licence or certificate to import some types of goods (for the relevant Member State)

EXPORTS CHECKLIST
·       Obtain an EORI Number (GB)
·       Engage a Customs Agent or Freight Forwarder or register for the National Export System for self-declarations
·       Check the requirements for export licences and/or certificates; licences are required for exports re:
-       Animals, plants, food and agricultural products
-       Chemicals and waste
-       Controlled goods (military equipment and weapons)
-       Diamonds
-       Sanctions (goods subject to export sanctions)
·       Check marking, labelling and marketing standards for food, plant seeds and manufactured goods including:
-       Product markings
-       Labelling standards
-       Marketing standards
·       Check the rules for alcohol, tobacco and certain oils (export excise duty)
·       Check the EU customer can make the necessary import declarations (in the relevant Member State)
·       Check the EU customer has the necessary import licences or certificates (in the relevant Member State)
·       An EC Sales List is no longer required
·       But Intrastat Supplementary Declarations are still required
(re dispatches/exports of £250k m or more)
·       Exports are reported in Box 6 of the VAT Return (but Box 8 is no longer used)

0 Comments

Brexit - Overseas Sellers?

12/15/2020

0 Comments

In an earlier blog we discussed what happens to UK businesses selling goods directly to consumers in the EU.

This time we will look at Non-UK businesses (including from the EU) selling goods to UK consumers in Great Britain (Great Britain being England, Scotland and Wales; the rules for Northern Ireland are different and we will discuss these in a future blog). Because there are some changes coming. EU distance selling no longer applies inwardly as well as outwardly so EU sellers may have to register in the UK in the same way as UK sellers may have to register in the EU. But these new rules apply to any sales of goods to consumers from outside the UK, EU or Non-EU (although there are variations for consumers in Northern Ireland for sales from the EU).

The new rules operate on a consignment threshold not exceeding £135. If the consignment value is over £135 normal import rules apply and either the seller or the customer will have to pay import VAT or duty in the normal way. If the seller opts to become importer of record and is not already registered for VAT in the UK they will have to register to make UK taxable supplies to GB consumers (but, of course, they can reclaim the input tax).

If the consignment does not exceed £135 then the change is that VAT will be due at point of sale rather than at point of importation. This will mean that UK supply VAT, rather than import VAT, will be due on these consignments. The new arrangements will also involve the abolition of Low Value Consignment Relief, which relieves import VAT on consignments of goods valued at £15 or less. Online marketplaces (OMPs), where they are involved in facilitating the sale, will be responsible for collecting and accounting for the VAT. For goods sent from overseas and sold directly to UK consumers without OMP involvement, the overseas seller will be required to register and account for the VAT to HMRC.

Business to business sales not exceeding £135 in value will also be subject to the new rules. However, where the business customer is VAT registered in the UK and provides its valid VAT registration number to the seller, the VAT will be accounted for by the customer by means of a reverse charge. The changes will not apply to consignments of goods containing excise goods or to non-commercial transactions between private individuals. Existing rules will continue to apply for these transactions. In addition, for sales of goods by overseas sellers, where the goods are already in the UK at the point of sale, HMRC will move the responsibility for accounting for VAT from the overseas seller to the OMP that facilitates the sale.

This will result in many overseas sellers (both EU and Non-EU) who are not currently registered in the UK having to register to sell goods directly to GB consumers.

0 Comments

Brexit - What Happens to VAT on Services?

12/10/2020

0 Comments

We hear a lot about goods and Brexit but not so much about services. So what happens after the 31st December 2020?

The good news for business-to-business supplies of services outside the UK is that there is no change; no change to place of supply or the reverse charge where the service is received. And one plus point is that the need to complete EC Sales Lists ends on 31st December 2020. Likewise, services purchased from outside the UK and received in the UK are still liable to the reverse charge here in the same way as they are now.

But the situation is more complicated in relation to business-to-consumer supplies. At the moment there are various place of supply rules for consumers: the general rule that tax is due where the supplier is located; the special rule for digital services that tax is due where the consumer is located; and various special rules in relation to services supplied where performed, such as cultural, artistic, sporting, scientific, educational or entertainment services.

But the general rule depends on the UK applying EU rules which will no longer be the case after 31st December 2020. Currently, services supplied to consumers outside the EU, if used and enjoyed outside the EU, are outside the scope of EU VAT. Initially, the same will apply to services supplied to consumers outside the UK, but from 1st July 2021, with the implementation of the next phase of the EU E-Commerce Package services supplied to consumers in the EU will be taxed in the EU via the Import One-Stop Shop (IOSS) and registration will be mandatory (and there will be a nil turnover threshold for non-established businesses i.e. based outside the EU).

The special place of supply rules have not changed so that services to consumers supplied where performed will still be taxed in the relevant Member State with registration potentially necessary. For digital services businesses currently registered under Union MOSS (i.e. within the EU) will move to Non-Union MOSS but still account for VAT on digital services to consumers across the EU. But what happens to Non-UK businesses supplying digital services to UK consumers and currently registered under Union MOSS (EU businesses) or Non-Union MOSS (Non-EU businesses)? Well, they remain registered under Union MOSS or Non-Union MOSS for supplies to EU consumers but they will have to separately register in the UK for their supplies to UK consumers.

If you have any specific queries about this please get in touch; we are always happy to help.

0 Comments

An End to Distance Selling

12/8/2020

0 Comments

From 1st January 2021 Distance Selling no longer applies to UK businesses.

So what will replace it?

Well, from 1st January 2021 the basic position for UK businesses selling directly to consumers in the EU is that these sales will become exports, zero-rated in the UK but liable to VAT (and potentially duty) in the Member State of importation. If no action is taken by the UK business then the customer will be liable for any VAT or duty due and will have to pay the VAT and/or duty before the goods are released as imports. Unhappy customers perhaps?

There are two possible solutions but both involve registering for VAT in the EU.

Firstly, if the UK business opts to become the importer of the record and pay the VAT and Duty at importation it would have to register for VAT in the relevant Member States but the import VAT could then be recovered (a valid EU EORI would also be required). It would then make sales to consumers in those Member States and account for the VAT there.

Or it could go one step further and route all goods through a single Member State and distance sell within the EU from that Member State. VAT registration would be required in the Member State of importation (as well as an EU EORI) and in any other Member State where the Distance Selling threshold is exceeded.

But all of this could be superseded by the next phase of the EU E-Commerce Package due to be implemented on 1st July 2021. That will create an Import One-Stop Shop which would allow a non-established business to register for IOSS in one Member State and account for all VAT due in the EU on external sales of goods (or services) to consumers in the EU.

What to do? Leave it and wait for IOSS or incur cost and admin time now to set up compliance obligations which may not be needed in 6 months’ time? We think there are risks either way. For example, taking action now addresses EU VAT issues early, ensures full VAT compliance and creates an established VAT position in the EU but there could be possible additional costs or extra admin time, and there may also be further delays with IOSS.

Whatever you decide to do we can help, so by all means get in touch and we will see what we can do to make things easier on the VAT side of things in the next phase of Brexit.

0 Comments

Brexit - VAT & Imports from the EU

Brexit - VAT & Exports to the EU

Brexit - Overseas Sellers?

Brexit - What Happens to VAT on Services?

An End to Distance Selling

Martin Kaney

Archives

Categories