24.11.2020 | Industry matters

VAT once Brexit period ends


With the Brexit transition period concluding at the end of December it has left SME’s asking what will happen with VAT when the transition period is up?


Andrew Diver, head of taxation at accountants Beatons Group, dispels a few VAT myths.

Will the UK cease VAT as a result of leaving the EU?

No, but the UK VAT and EU VAT will be different.
The UK government will be able to charge different rates for products and services and the UK will not be able to use any of the simplification arrangements in the EC such as MOSS (Mini One Stop Shop).

If my business provides services to customers based in countries in the EU, will there be no VAT?

No, if you are supplying services to a non-business customer in the EU then potentially you will be liable to UK VAT on the value of the supply.

Does my business need to register for VAT in the different EU countries we have customers?

If the customers are businesses registered for VAT in the local country (and you need to keep evidence of this) then you will be able to reverse charge the supply.
If they are not registered for VAT in their country, then you may need to register.

Will businesses based in the EU need to register for UK VAT?

Potentially. It will depend upon whether they supply to UK businesses and whether those UK businesses are VAT registered and can benefit from the reverse charging. If not, they may need to register for UK VAT.

Is it the end of EC Sales lists and Intrastat returns?

No, while EC sales lists will cease from January 1, 2021, Intrastat returns will be required for those importing goods from the EU to aid tracking those deferring customs declarations.
Businesses in Northern Ireland will need to continue Intrastat returns up until 2025 under the Northern Ireland Protocol, but those businesses only exporting to the EU (no imports) will not need to make any Intrastat returns.

Andrew Diver added: “This information is for guidance only and would advise firms to seek full tax advice specific to their circumstances before the end of the transition period.”

By Andrew Diver, Beatons Group