New VAT trading guidance between Great Britain and Northern Ireland

VAT trading guidance

December 04, 2020

Brexit was definitely going the affect VAT accounting. Probably there is no extension and the transition period will end on 31st December 2020. From 1 January 2021 we need to account for VAT as per the new guidance. Now the simplified rules will not be applicable for Great Britain. There is no border between Northern Ireland and Ireland. While Ireland is an EU member state and Northern Ireland is part of UK, it is going to be difficult for VAT accounting. Though NI is part of UK’s VAT system, EU VAT rules will still be applicable in NI. This leads to complication in VAT rules.

Below are the main points from the New VAT guidance:

  • - Intra-EU simplification rules will no more be available for goods moving in or out of GB but will be available for goods moving in or out of NI.
  • - For sales of goods in NI, a new VAT registration is not required as NI is a part of UK’s VAT system.
  • - There will be a single UK VAT Return for all sales across UK including the ones between GB and NI. VAT will be charged and reclaimed as before.
  • - Domestic tax will continue to apply to goods sold on ferries between Great Britain and Northern Ireland.
  • - Margin Scheme cannot be used for sales in Northern Ireland if the stock is purchased in GB. VAT on these sales must be accounted on the full value of the supply like normally done.
  • - When a business moves its own goods from NI to GB there is no VAT to be charged if there is no sale to customers
  • - When a business moves its own goods from GB to NI VAT needs to be charged and can be recovered. If the business does not recover the associated input VAT it can reattribute unrecovered VAT on the original purchase in GB by making annual adjustment.
  • - In case of VAT group if goods need to be supplied from GB to NI VAT will have to be charged. Id the goods are in NI at the time of supply, both needs to be established in NI for VAT to be disregarded.
  • - The output VAT should be mentioned in the same box as before and input can be claimed the same way as before by keeping the evidence of an invoice. However, a small number of exceptions are also there.

1) If declared into a special customs procedure when they enter Northern Ireland or Great Britain.

2) If subject to domestic reverse charge.

3) If subject to an Onward Supply procedure.

For the above exceptions, the customer or importer is responsible for accounting for the VAT due.

If you have any issues with your VAT accounting. Doshi accountants will be happy to help you. We can file your VAT Online, guide you for your VAT return, and help you with all the matters of VAT accounting. We have been providing VAT return services all over UK for more than two decades. Contact us for best VAT return services.