1. Sales of goods to EU consumers/IOSS
Sales of goods to EU consumers are now exports from mainland UK (GB) and can be zero-rated with proof of postage/shipment. There are separate rules for movements across the Irish land boundary or from Northern Ireland to other EU Member States under the Northern Ireland protocol. These can still be treated as distance sales. Notice 725 has been updated accordingly https://www.gov.uk/guidance/vat-on-movements-of-goods-between-northern-ireland-and-the-eu#section6.
However, for movements of goods from GB, businesses need to consider the implications of the import into the EU. If delivering on duty paid (DDP) terms, then local EU VAT advice must be sought. With effect from 1.7.21 the EU are introducing the Import One Stop Shop (IOSS) for sales < 150 Euros. Please see the following link to the Europa website for more detail https://ec.europa.eu/taxation_customs/business/vat/modernising-vat-cross-border-ecommerce_en.
Also, Tony Chamberlain’s previous VQOTW dealt with this and the next subject on our list. https://www.cronertaxwise.com/community/vqotw-changes-to-the-rules-for-movements-of-goods/
2. Sales to UK consumers via online marketplaces
GB has introduced a £135 threshold for goods coming from overseas sold to GB consumers via a third party OMP. Here the OMP is responsible for accounting for the UK VAT on the sale and there are no import implications for the supplier. If the goods are sold direct by the supplier to the consumer, the supplier will have to VAT register in GB and account for VAT.
For consignments over £135 whether direct or via an OMP, businesses will have to check their incoterms to see who is the importer into GB – themselves or their customer.
Please see the following link to HMRC’s guidance and Tony’s Q&A as above: https://www.gov.uk/government/publications/changes-to-vat-treatment-of-overseas-goods-sold-to-customers-from-1-january-2021/changes-to-vat-treatment-of-overseas-goods-sold-to-customers-from-1-january-2021
3. Postponed Import VAT Accounting
All goods coming from the EU into GB will now be imports rather than acquisitions. In theory this means import VAT is due at the point of entry and must be paid to release the goods and the VAT recovered later with a C79 form as evidence.
To help businesses with cashflow HMRC have introduced Postponed import VAT Accounting, whereby the VAT can be accounted for as a reverse charge on the VAT return. There is no need to apply for PIVA but the importer or their agent will have to indicate on the Customs declaration that PIVA will be used in order that no VAT is charged at the point of entry.
Please see the following links: https://www.gov.uk/guidance/check-when-you-can-account-for-import-vat-on-your-vat-return
4. B2B services/B2C services
B2B services have not been greatly impacted by Brexit. The place of supply for general rule services is still where the recipient belongs. Although the use and enjoyment rules have been extended to outside the UK rather than outside the EC.
There is no longer any need to submit EC Sales Lists, but the customers EC VAT number can still be shown on the invoice where it has already been obtained as it is good evidence of business status. The “reverse charge” wording on the invoice is no longer a requirement, but again it may be prudent to retain as it indicates the onus is on the customer to deal with the VAT accounting rather than the supplier.
B2C services – Sched 4A paragraph 16 treatment for professional and educational services (amongst others) has been extended to include EU individuals as well as non-EU. Section 12 of Notice 741A has been updated and contains a full list of qualifying services. https://www.gov.uk/guidance/vat-place-of-supply-of-services-notice-741a#sec12
A summary of all service changes can be found at the following link: https://www.gov.uk/government/publications/accounting-for-vat-on-goods-moving-between-great-britain-and-northern-ireland-from-1-january-2021/accounting-for-vat-on-services-between-the-uk-and-eu-member-states-from-1-january-2021
5. Non-union MOSS
UK businesses supplying digital services to EU consumers can no longer use the Mini One Stop Shop; instead they will have to choose a member state to register for the non-EU version known as Non-union MOSS scheme and account for all their B2C EU sales via that system.