The transition period for the UK leaving the EU has ended. The UK-EU Trade and Cooperation Agreement has been ratified by the UK Parliament and, at 11pm on 31 December, 2020, the UK left the EU customs union and single market.
Our Accounting Brexit Hub is a one-stop shop for new customs regulations and VAT requirements which businesses trading with the EU must now understand and follow.
Please talk to us about helping you with your "what-if" forecasting and planning for 2021 in this new UK-EU trading environment.
Find out about the Trade Agreement.
Key to note is that the terminology used for sales and purchases between the UK and EU member states has now changed. Acquisitions (purchases) are now imports, and dispatches (sales) are now exports.
No. Distance selling thresholds allowed UK VAT to be charged until the value of the goods sold to an individual country exceeded a certain threshold, beyond which local VAT became a requirement or the customer was left to foot the import VAT bill. The latter remains an option post-Brexit, but the seller may instead choose to register and pay recoverable import VAT and then charge VAT to the customer. The EU rules will be simplified from 1 July, 2021 with the extension of the One Stop Shop for e-commerce businesses, removing the need to register in individual member states.
Postponed VAT accounting and deferment account are two different schemes.
If you import goods regularly, you can apply for a deferment account to delay duty / VAT. A deferment account means one payment a month (15MFD) rather than by consignment. A deferment approval number (DAN) is issued by HMRC upon approval. An agent can defer payments on your behalf against your DAN.
From 1 January 2021, if your business is registered for VAT in the UK, you are able to account for import VAT on your VAT Return on goods that you import into Britain from outside the UK. Accounting for import VAT in this way means that you’ll declare and recover import VAT on the same VAT Return, rather than having to pay upfront and recover it later.
If you choose to go down the PVA route, you will need to take the following steps:
You will also need to register for online statements. Your accountant cannot register on your behalf as an agent.
A business can also choose to pay import VAT upon arrival and reclaim it in the normal way.
Movement of goods for repair is not subject to duty or import VAT. This is called inward processing. Authorisation to use inward processing to process or repair goods means that a business will not pay customs duty and import VAT on goods imported from outside the UK and then returned. To apply for inward processing, you need to be established in the UK and have an EORI number.
Full authorisation allows you to use:
inward processing regularly
simplified declarations to import or export your goods
Authorisation can be applied for online.
The seller will need to register for VAT in the country in which the inventory is held (import VAT). The seller will also need to register for VAT where the customer is situated, subject to distance selling thresholds. Such thresholds will be withdrawn in July 2021 upon the implementation of the IOSS (see VAT Guide to Brexit). There are no UK VAT implications.
Triangulation refers to shipping goods to one EU country and invoicing another. Triangulation meant that the VAT registered UK intermediary did not need to register for EU VAT. Prior to Brexit, the manufacturer would zero-rate its sale to the UK. A UK VAT number can no longer be applied in that triangulation. If, however, B registers for VAT in country C then A can zero-rate its sale to the UK.
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