A Look At VAT Issues Arising After Brexit

Today we thought we would give you some information on some of the rather complex issues that have arisen for some businesses in Northern Ireland now the United Kingdom has left the EU.

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This is quite a complicated subject and the following is just a simplistic view of these issues, however if you would like some practical advice on this subject for your own business please don`t hesitate to get in touch with us here at WHR Accountants on 028 3752 2909.

The information below is taken from the Bloomberg Tax website:

The Northern Ireland Protocol to the EU–UK Withdrawal Agreement applies EU law “to and in the UK in respect of Northern Ireland” in respect of certain specified value-added tax (VAT) provisions concerning goods, but not services. Although businesses trading under the Protocol remit their VAT to the U.K. tax authority, HM Revenue & Customs (HMRC), EU VAT rules, rather than U.K. VAT rules, apply to supplies of goods in relation to Northern Ireland (NI).

In effect, so far as VAT on goods is concerned, HMRC must operate as if part of the U.K. remains within the EU. As a result, movements of goods from NI to Great Britain (GB) (that is, England, Scotland and Wales) must be regarded as if they were imports from the EU, and movements in the other direction should be seen as exports to the EU.

The Specific EU Vat Provisions Include:

• Directive 2006/112/EC, the principal EU VAT Directive (PVD)
• the Directive governing refunds to EU VAT-registered businesses of VAT incurred in other member states;
• the 13th Directive, which enables businesses in third countries to obtain refunds of EU VAT;
• provisions relating to administrative co-operation in relation to fraud and mutual assistance.
  The last point above may make it easier for EU tax authorities to seek information from HMRC about NI VAT-registered businesses and even, where appropriate, to continue to make visits to those businesses. HMRC is relying very heavily on Articles 201 and 211 of the PVD which give member states considerable discretion on how they administer the collection of import VAT.

Which Business Fall Under The Protocol?

The Protocol applies to any VAT-registered business that either:

• sells goods that are located in NI at the time of their sale; or
• receives goods in NI from VAT registered EU businesses for business – purposes; or
• sells or moves goods from NI to an EU member state.
  Whenever quoting their VAT number to an EU supplier, a business covered by the Protocol should add the prefix “XI.”

I hope the above gives you an insight into this subject, as we mentioned earlier for more details about your own business get in touch with our offices at the earliest opportunity.