|Whilst many will be looking forward to seeing the back of 2020, it is important to remember that come 1 January 2021 the trading relationship between the UK and the European Union will look very different. |
Following further negotiations between Downing Street and Brussels in October, the Prime Minister warned UK businesses to prepare for the prospect of a ‘no-deal’ Brexit. Whilst there is still scope for a deal, time is running out and you should, as far as possible, try to plan ahead for the issues a no-deal Brexit could present.
|VAT and the NI Protocol |
For VAT purposes, Northern Ireland will be treated as the EU from Great Britain’s perspective. The movement of goods between Northern Ireland and Great Britain will be treated as exports/imports while movement of goods between Northern Ireland and the Republic of Ireland will move freely as it will remain in the Single Market. However, Northern Ireland is, and will remain, part of the UK’s VAT system.
UK VAT rules related to transactions in services will apply across the whole of the UK. HMRC will continue to be responsible for the operation of VAT and collection of revenues in Northern Ireland.
Under the obligations in the Protocol, import VAT will be due on goods that enter Northern Ireland from Great Britain. The same will also broadly apply to goods entering Great Britain from Northern Ireland. There will be no requirement for a new VAT registration for sales of goods in Northern Ireland.
If you are already VAT registered, your existing VAT registration will be unaffected, and you will not need to get another VAT registration. You will continue to account for VAT on all sales across the UK through your single UK VAT return, which will contain the same boxes as now.
Supplies of goods from NI to EU (including Ireland) and from EU (including Ireland) to NI: The VAT treatment will remain unchanged from the current treatment as zero-rated intra-EU dispatches and acquisitions – this represents a great opportunity for NI businesses to have access to the EU market in a way which GB businesses (in the absence of a deal) will not be able to.The EU will grant NI businesses an EU VAT identification number – a ‘XI’ country prefix on their UK VAT number – to enable them to report goods transactions after 31 December 2020 (See below for further details).To get advice on moving goods between Great Britain and Northern Ireland sign up for the Trader Support Service.NI businesses will still have to fulfil EU reporting requirements for goods (e.g. EC Sales Lists / Intrastat Returns) and will also still be subject to B2C Distance Selling registration rules (until 1 July 2021 when new a new single VAT Return will take effect (OSS, One-Stop-Shop). NI businesses will still be able to avail of the simplified procedure for triangulation (where an NI business is an intermediate supplier, but the goods are shipped directly between two other EU countries) to avoid the need to register for VAT in other EU member states.NI businesses will also still be able to reclaim EU VAT incurred via the electronic cross-border refund system. Supplies of goods from NI to GB and from GB to NI
VAT will continue to be accounted as it is currently on goods sold between Great Britain and Northern Ireland. This means that the seller of the goods will continue to charge its customers VAT and should show this on its invoices. The VAT charged will be accounted for as output VAT on the VAT return in the same box as it is now.
Where the customer receives an invoice from the seller showing that VAT has been charged, it may use this as evidence in order to reclaim the VAT as input VAT, subject to the normal rules.
However, there are a small number of exceptions to this where goods are: declared into a special customs procedure when they enter Northern Ireland or Great Britain currently subject to domestic reverse charge rulessubject to an Onward Supply procedure Where the movement of goods falls within one of these exceptions, the customer or importer will account for the VAT on their UK VAT return.
Economic Operator Registration and Identification (EORI) Scheme Number
From 1 January 2021, you’ll need an EORI number that starts with XI to:move goods between Northern Ireland and non-EU countries (including Great Britain)make a declaration in Northern Irelandget a customs decision in Northern Ireland
How do I get an XI EORI number?
To get an EORI number that starts with XI, you must already have an EORI number that starts with GB.
If you do not have one, apply for an EORI number that starts with GB as soon as possible.
If you already have an EORI number that starts with GB and HMRC thinks you need one that starts with XI, they’ll automatically send you one in mid-December 2020. Or alternatively, you will also be able to apply for one directly in December 2020.
How do I get a GB EORI number?
To apply for a GB EORI number use the link above. Before doing so, you will need the following information:VAT number and effective date of registration – these are on your VAT registration certificateNational Insurance number – if you’re an individual or a sole traderUnique Taxpayer Reference (UTR) – find your UTR if you do not know itbusiness start date and Standard Industrial Classification (SIC) code – these are in the Companies House registerGovernment Gateway user ID and passwordIf you need a Government Gateway user ID, use either:the one for your business or organisationyour own if you’re applying as an individualIf you do not already have a user ID, you’ll be able to create one when you apply.
We are here to help
We hope you find this information helpful. As mentioned, the Trader Support Service is also a very useful tool which will provide advice on moving goods between NI and Great Britain. Alternatively, if you would like to speak to a member of our team, please do not hesitate to contact us.