HMRC has issued new guidance, which clarifies the VAT rules relating to movements of goods between Great Britain (“GB“), Northern Ireland (“NI“) and the EU from 1 January 2021, assuming there is no extension to the transition period.

In brief, intra-EU rules and simplifications applicable to the movement of goods between member states will no longer be available where goods move to or from GB; whereas, EU VAT rules for goods will apply to NI. For goods moved by VAT registered business from GB to NI, those transactions are to be reported as movements of own goods on the UK VAT return. Likewise, goods supplied between members of a VAT group to or within NI may also need to be accounted for as a movement of own goods, with related compliance obligations. On the other hand, for goods moving from NI to GB there will be no requirement to account for VAT unless the goods are supplied to a customer.

Please find a summary of the key points from the guidance set out below:

  • VAT registration of NI businesses: HMRC confirm that there will be no requirement for a new VAT registration for sales of goods in NI and both GB and NI sales should continue to be reported on a single UK VAT return. It is unclear what this means for the EU’s announcement earlier this month that they intend to introduce a special VAT identification number for NI businesses, giving a ‘XI’ country prefix on their UK VAT number, that would be registered in VIES, and a ‘XU’ country code for other UK businesses.
  • VAT on goods sold between GB and NI: HMRC confirmed that VAT-registered sellers should continue to charge UK VAT on goods sold between GB and NI and report this on the VAT return in the usual way. The exception to this includes goods that are: 1) declared into a special customs procedure when they enter NI or GB; 2) subject to domestic reverse charge; or 3) subject to an Onward Supply procedure. For these exceptions, the customer (or importer) is responsible for accounting for the VAT due.
  • Businesses moving their own goods from GB to NI: VAT is due on movement of own goods from GB. This VAT should be payable on the UK VAT return and recovered in line with the normal rules.  Where a business moves its own goods between GB and NI, it will usually be able to recover the full amount of VAT incurred. Where a business moves goods from GB to NI, and does not reclaim the associated input VAT, it will be able to reattribute the previously unrecovered input VAT on the original purchase in GB as if the goods had been used for a taxable purchase (via their annual adjustment).
  • Businesses moving their own goods from NI to GB: There will be no requirement to account for VAT when a business moves its own goods from NI to GB (unless the goods are subject to a sale or supply to a customer).
  • Sales of goods by members of a UK VAT group: VAT will now be due where goods are supplied by members of a VAT group from GB to NI. Further, where supplies of goods are made between members of a VAT group, and those goods are located in NI at the time of supply, these will only be disregarded if both members are established, or have a fixed establishment, in NI.
  • Sales of goods on board ferries: Goods sold on board ferries between GB and NI will continue to be taxed domestically. However, where goods visit GB and NI as part of a journey to third countries, the supply will fall outside the scope of UK VAT.
  • Intra-EU simplifications: Intra-EU rules and simplifications will no longer be available for movement of goods involving GB, but may be available for goods moving in, from or to NI.
  • Margin Scheme: Margin schemes involving goods will not usually apply for sales in NI where the stock is purchased in GB. The VAT on these sales will be subject to the normal rules and must be accounted for on the full value of the supply.

Kathryn advises multi-national businesses on VAT related to planning, structuring and reorganisations, and is experienced in managing tax authority audits and disputes. Kathryn has had a lead role on advising clients across a number of sectors including those in technology, finance and retail on VAT and Brexit-related developments, assessing the implications of VAT changes and post-Brexit structures.


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