The EU-UK Trade and Cooperation Agreement, which was signed on December 30, 2020, has changed the way businesses and industries operate in the United Kingdom. The impact on Value Added Tax is the most significant change for our clients (VAT).
The New VAT Landscape in the Republic of Ireland, Northern Ireland, and the United Kingdom
The agreement’s basic strokes are that the laws of commerce with a non-EU nation (referred to by Revenue as a “third country”) now apply to any trade (goods or services) with the United Kingdom. Northern Ireland, which is part of the United Kingdom but not Great Britain, has its own set of rules: it will continue to be considered as a European member state in terms of goods VAT, but as a non-EU nation in terms of services VAT.
- The VAT regulations on imports and exports apply to any supply or movement of taxable products between Ireland and the United Kingdom.
- You are no longer required to record information of your transaction with the United Kingdom (except Northern Ireland) on the Intrastat or VAT Information Exchange Systems (VIES).
- On the Intrastat system and the VAT Information Exchange System, you must submit data about your transaction with Northern Ireland (VIES).
- Agreed Triangulation and other EU simplifications no longer apply to transactions involving the United Kingdom.
- Sales to the United Kingdom are no longer subject to the Mini One-Stop-Shop (MOSS) system. As a result, you may need to register for VAT in the United Kingdom in order to make such transactions.
Recognize your responsibilities so you may take proactive action.
If a client asks us a simple question if we’re an Irish company selling a service in the UK, do we need to register for UK VAT? – you’d think we’d be able to respond with a simple Yes/No. Unfortunately, there isn’t one. Many factors will play a role in this scenario, including:
Whether the service is sold to individuals or companies
Where the service's 'point of supply' is legally defined
What is the service
The industry in which the company operates
The worth of the item being sold
Changes In Your Trading Methods Should Be Considered
Any firm that decides to register for VAT in the United Kingdom will face consequences. You’ll be adding extra administration to the firm overnight, having to perform more bookkeeping, and filing twice instead of once. For filing purposes in the United Kingdom, you’ll require an accounting system that links to HMRC. However, the implications of continuing as if nothing has changed are severe. If you get it wrong, you might end up having to refund back 20% of your UK earnings in a year since you weren’t registered for VAT in the first place.
Take use of Enterprise Ireland’s advice and resources.
In the area of Brexit, Enterprise Ireland is doing a lot of action. They’ve started a new initiative called Evolve UK, which will provide crucial insights to Irish firms on the changing UK market and industry changes/opportunities through publications, briefings/bulletins, and virtual events, all of which will be managed by their UK-based staff. The Evolve Strategic Planning Grant, which is part of this campaign, is aimed to help clients navigate the changing trade climate in the UK. This €5,000 award assists businesses in adapting their market strategy in order to secure and expand revenues.
TAS Consulting are here to provide all VAT compliance and custom clearance services for non resident companies. Contact us today!
You can also Visit our Pages for more information regarding VAT services
Get a VAT Number to sell in EU – For Online Sellers
E-Commerce retailers based in the EU who make sales online EU Customers are required to follow distance selling rules. There are certain thresholds at present for each EU country. Once the retailer exceeds the threshold for the customer’s country, he must then switch to the domestic tax rate of that country and ensure you are VAT registered in that member state.
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