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