FINANCE
EUROPE :
THE FINAL COUNTDOWN
Businesses that export and import goods and services to and from the EU have been preparing for the end of the transition period . Scott Craig , VAT partner with accountants Azets , summarises the main Brexit-related issues they have been dealing with ...
Export of goods to individuals in the EU After January 1 , these sales will not be liable to UK VAT ( at present they would be liable until distance selling limits are exceeded and the supplier has to register in another EU country ).
Suppliers could be liable to register and account for VAT in all EU countries they make sales in – there is no registration threshold .
Simplified online VAT accounting could be introduced from June . However , this may be deferred until later .
Businesses selling to individuals in EU countries have these choices :
> Register and account for VAT in the EU countries in which sales take place , irrespective of their value – this assumes seller is responsible for delivering the goods VAT and duty paid .
> Goods valued below £ 135 should be below any Customs Duty limit , but if they are above , they will need to confirm the additional duty cost .
> Change the terms of sales agreements so customers are responsible for import VAT and duty .
> Don ’ t sell to individuals in the EU until the VAT position is defined and a simplified method of accounting is introduced .
We are seeking clarity on government plans for simplified retail sales accounting . Overseas suppliers may need to register for UK VAT . Exports Business to Business – key issues
> Are you the importer of the goods in another country ? This will depend on the terms of each sale . If they have been sold under Delivery Duty Paid ( DPP ) terms , sellers are responsible for paying import VAT and duty ( and customs formalities ). This may require them to register in other countries .
> The tariff classification of the goods needs to be confirmed to ensure the correct duty rate has been applied . Imports of EU goods The importer will be responsible for paying ( and recovering ) UK import VAT and , where applicable , paying Customs Duty . VAT will be recoverable according to normal rules . The duty will become an additional cost . The points that need to be confirmed are : > Are you the importer of the goods ? This will depend on the terms of each sale . If goods are sold under DDP terms , the seller will be responsible for import VAT , duty and customs formalities .
> The tariff classification to ensure the correct duty rate has been applied .
> The import VAT accounting procedures that will apply . HMRC will not issue C79 forms and importers will be responsible for accounting and recovering import VAT . Northern Ireland This depends on the outcome of negotiations . We currently believe sales will continue to be recorded as a sale to another UK person / business , so UK VAT would be applicable . Rest of the world These will be outside the scope of UK VAT – previous procedures will still apply . You need evidence that the goods have left the UK . Exchanges of personal data ( addresses , contact numbers ) with EU organisations ( couriers , postal service ). GDPR rules will apply . Consultancy services received from outside the UK The VAT position will be unchanged . If you receive services from non-UK suppliers you will be liable to account for UK using the reverse charge procedures . Digital supplies is an area of question . Barter agreements If arrangements involve the supply and import of goods from outside the UK , the import VAT and customs duty costs will be the importer / supplier ’ s responsibility , providing that it is responsible for delivering the goods duty paid . This point needs to be confirmed . With services , the VAT position will be unchanged .
Services from non-UK suppliers will be liable to UK reverse charge procedures .
Both parties must issue and exchange invoices .
While no cash payment may be made , the supplies still have to be recorded and accounted for .
Azets , with its Teesside base at Wynyard , is a specialist local accountant and business advisory group providing audit , payroll , corporate finance , tax and banking and finance services . Scott Craig VAT partner , Azets
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