Getting Ready For Brexit - Azzure IT
Azzure IT

Getting Ready For Brexit

Azzure IT Would Like To Help Our Customers Prepare For Brexit

This Will Mean That You Will Require Some Changes To Your Dynamics 365 Business Central Or Dynamics NAV System

If your business imports, exports or moves goods to or from the European Union or Northern Ireland, then Brexit will have an impact on what you do and how you do it and as a result we will need to ensure your Microsoft Dynamics solution is also prepared for these changes.

Check if your business is ready for Brexit by using this tool

Importing, Exporting & Moving Goods Between The U.K & Northern Ireland

Prepare to import goods from the EU to The United Kingdom from 1 January 2021

Get Started

 

Prepare to export goods from The United Kingdom to the EU from 1 January 2021

Get Started

We also hosted a webinar on “Getting Ready For Brexit”. This webinar covered all of the most important information around the U.K’s exit from the E.U and what this means for your Microsoft Dynamics 365 Business Central or Microsoft Dynamics NAV solution.

Please note that if your business imports, exports or moves goods to or from the European Union or Northern Ireland, then Brexit will have an impact on what you do and how you do it and this webinar is essential for your business.

What does this mean for my business?

Importing

The importing of goods into the UK will be subject to significant change but imports from both EU and Non-EU countries will be treated the same.

Currently if a UK company imports goods from outside of the EU, they will be charged Import VAT at the point of import, which they will pay as the goods cross the border into the UK. They would then claim that import VAT back from HMRC on their VAT Return, up to 3 months later.

If the above was applied to Imports from EU countries as well, this would potentially have a significant cash flow impact on UK businesses, and so Postponed VAT Accounting will be effective on all imports both from all countries outside of the UK.

Postponed VAT Accounting

Postponed VAT Accounting will mean that Import VAT will be accounted for on your VAT Return and will not require an upfront payment of Import VAT that would be paid back later. UK VAT Registered business will need an EORI number. Their EORI number will be used when goods are imported into the UK.

At the end of each month, the business will receive an Online Statement from HMRC detailing the transactions subjected to Import VAT, and the value of that Import VAT. At this point, the business will need to account for that Import VAT such that it will subsequently be included in their VAT return.

Any duty applicable on imports will be subject to the existing rules and will remain payable at the point of import unless duty deferment facilities are in place.

Exporting

Exports to any country outside of the UK will be zero rated, meaning that no VAT need be calculated for those transactions.

Changes to how you report in your VAT Return

To account for VAT under the new Postponed VAT Accounting rules, there will be changes to how you account for VAT in your VAT return:

In the following example:

Net VAT Gross
UK Sales 100.00 20.00 120.00
EU Sales 50.00 0.00 50.00
UK Purchases 70.00 14.00 84.00
EU Purchases
(Subject to Import VAT)
30.00 6.00 6.00

*All Sales and Purchases are for Standard Rate Products

The following table shows how you would report these transactions in your VAT Return before and after the end of the Transition period on 31/12/2020.

 

Box No. Description Change Current example  From 1st Jan 2021
Box 1 VAT due in the period on sales and other outputs include the VAT due on imports accounted for through postponed VAT accounting 20.00 26.00
Box 2 VAT due in the period on acquisitions from other member states of the EC 6.00 0.00
Box 3 Total VAT Due Box 1 + Box 2 26.00 26.00
Box 4 VAT reclaimed in the period on purchases and other inputs (including acquisitions from the EC) Include the VAT reclaimed in this period on imports accounted for through postponed VAT accounting 20.00 20.00
Box 5 Net VAT to be paid (+); or to be reclaimed (-); Box 3 – Box 4 6.00 6.00
Box 6 Total value of sales and all other outputs excluding any VAT 150.00 150.00
Box 7 Total value of purchases and all other inputs excluding any VAT 100.00 100.00
Box 8 Total value of all supplies of goods and related costs, excluding any VAT to other EC member states It is expected that going forwards this will include the value of all exports not just those to other EC countries. 50.00 0.00
Box 9 Total value of all acquisitions of goods and related costs, excluding any VAT, from other EC member states It is expected that going forwards this will include the value of all imports not just those from other EC countries. 30.00 0.00

Details of all the required changes are available from the following links:

Consignments under £135

If a consignment of goods has a value of less than £135 then Import VAT does not commonly apply to those goods at the point of import.

As a VAT registered buyer, you will be responsible for:

  • Supplying the Seller with your VAT registration number so that they can zero rate the supply
  • Apply a Reverse Charge to those goods so that the Import VAT is recorded in the VAT return

If the UK customer is not VAT registered, then the Vendor will need to register for VAT in the UK and they will charge UK VAT at the appropriate rate. As the recipient is not VAT registered, they will have to absorb the cost of the VAT.

  • UK companies will still be required to complete Intrastat returns for Imports from the EU into the UK, as it did prior to Brexit.
  • Completion of Intrastat returns in relation to Dispatches from the UK to the EU will no longer be required.

UK companies will no longer be required to prepare and submit EC Sales Lists following a No-Deal Brexit.

There are special rules related to trading with, or as, a VAT registered business that is based in Northern Ireland. These specific rules can be reviewed in detail at the following link:

Changes to accounting for VAT for Northern Ireland and Great Britain from 1 January 2021

Trade between Northern Ireland and other UK countries will remain largely unaffected, but, there are implications for movements of goods where being purchased from or sold to an EU member state.

To import goods into the UK or export goods from the UK after 1st January 2020, all businesses will be required to obtain an EORI (Economic Operators Registration & Identification) number.

The registration process takes roughly 5 days but you a business must have one of these in place to import or export goods after 1st January.

An EORI number is not required to buy or sell services in the EU.

Business Central Configuration Changes

Please fill in the form below to view the Business Central/NAV configuration changes