Brexit – VAT changes

UK Taxes. Northern Irish VAT. E.U. VAT. VIES. Intrastat. Mini One Stop Shop. Triangulation.

The VAT rules for goods and certain services traded with Great Britain will change from 1st January 2021.   From 1st January 2021, Northern Ireland will continue to follow the EU’s VAT rules in relation to goods. However the UK VAT rules will apply for services.  As a result, from 1st January 2021 Northern Irish VAT registered businesses will be required to follow a dual VAT regime.

From 1st January 2021 supplies of goods from Ireland to Great Britain will be regarded as exports while goods purchased from Great Britain and delivered into Ireland will be treated as imports.  Up to 31st December 2020 such movements are treated as intra-EU dispatches or distance sales.

What does this mean for trading between Ireland and Great Britain?

1. Supplies and movement of taxable goods between Ireland and the Great Britain are subject to the Value-Added Tax rules on imports and exports.  it will no longer be possible to apply the VAT zero rate to the export of goods to Great Britain if the customer is Irish established and the customer arranges the export.

• You do not have to report details of trade with the UK (excluding Northern Ireland) on the Intrastat system or VAT Information Exchange System (VIES).
• You do have to report details of trade with Northern Ireland on the Intrastat system and VAT Information Exchange System (VIES).
• Agreed EU simplifications, such as triangulation, do not apply to transactions involving Great Britain (GB).
• The Mini One-Stop-Shop (MOSS) system does not apply to sales to the UK. Therefore, you may need to register for VAT in the UK in respect of such sales.

For imports, the postponed method of accounting for import VAT should apply to goods imported into Great Britain.  This means that import VAT will not be due at time goods are imported; instead it can be accounted for in the next VAT return. This will also apply when goods are imported from outside the EU and could result in significant cash flow savings for the importer.

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.