Abstract view of building

25 November 2020 • 4 minute read

Country-specific updates: UK

VAT on goods moving between Great Britain and Northern Ireland after Brexit transition period

The UK tax authority has published guidance on the VAT treatment of goods moving between Great Britain and Northern Ireland from 1 January 2021. Northern Ireland will remain within the UK VAT regime, but EU VAT rules on goods (not services) will apply under the terms of the Northern Ireland Protocol.

VAT on goods sold between Great Britain and Northern Ireland will be accounted for as it is currently. The seller will charge VAT which will be shown on invoices and accounted as output VAT in the VAT return and the customer will use the invoice as evidence to claim input VAT. However, there will be a number of exceptions. The guidance states that, where:

  • goods are declared into a special customs procedure when they enter Northern Ireland or Great Britain, the customer or importer will be liable to account for VAT through either payment upfront, using a duty deferment account, or through Postponed VAT accounting in the VAT return;
  • goods are subject to the domestic reverse charge rules, the customer will continue to liable to account for VAT;
  • goods are subject to an onward supply procedure, the importer may claim onward supply relief and the customer accounting for VAT in the final destination country; and
  • goods are sold by an overseas seller to a consumer through an online marketplace, the online marketplace will be liable to account for VAT.

Businesses moving their own goods from Great Britain to Northern Ireland will have to account for output tax which may be reclaimed as input tax subject to the normal rules for taxable/exempt use. In contrast, businesses moving their own goods from Northern Ireland to Great Britain will not have to account for output tax unless those goods are subject to a supply for VAT purposes to the customer.

The guidance confirms that existing Northern Ireland VAT registrations will remain valid and new VAT registrations for Northern Ireland sales of goods will not be required.

While VAT groups may still include members established in Great Britain and Northern Ireland, if goods are moved from Great Britain to Northern Ireland between members of the VAT group, the disregard rule will not apply and VAT will be due in the same way as when a business moves its own goods. Supplies of goods located in Northern Ireland from one member of a VAT group to another will only be disregarded if both VAT group members are established, or have a fixed establishment, in Northern Ireland. Where one or both members only have establishments in Great Britain, the disregard will not apply and VAT must be accounted for by the representative member. Any VAT charged may be reclaimed under normal input tax rules.

The guidance also covers the VAT treatment of margin schemes and sales of goods on board ferries between Great Britain and Northern Ireland. Intra-EU rules and simplifications will not be available for movements of goods involving Great Britain but will be available for movements of goods between the EU and Northern Ireland.

In separate HMRC guidance issued on 16 November 2020 in relation to declarations:

  • Businesses brining goods into Northern Ireland from Great Britain will be required to:
    • submit an entry summary (Safety and security) declaration; and
    • make a declaration when the goods arrive.
  • Businesses bringing goods into Great Britain will not be required to make any declarations for most goods. HMRC will publish further guidance in due course.

DLA Piper comment: The arrangements for goods moving between Northern Ireland and Great Britain remain subject to change as part of the Brexit negotiations. Businesses involved in sales and or the movement of goods between Northern Ireland and the rest of Great Britain are strongly advised to keep informed of HMRC’s constantly updated guidance. Businesses which have received a GB EORI number and sign up to the Trader Support Service website before 23 November 2020 will automatically be allocated an XI EORI number. Businesses which miss the cut-of date may need to make a separate application to receive an XI EORI number.

Print