Country Specific: UK

UK - tax authority announces delay in processing VAT refunds for overseas, non-EU businesses

The UK tax authority has published a note explaining that its internal working arrangements as a result of the COVID-19 pandemic have led to VAT refunds to some overseas (non-EU) businesses (under the Overseas Refund Scheme (historically known as 13th Directive claims)), being made outside its objective of making the refund within six months of the submission deadline of 31 December. The claims that are affected are those within the prescribed year 1 July 2018 to 30 June 2019, that were submitted on or before 31 December 2019.

The tax authority had also set out what businesses need to do if they are unable to obtain a certificate of status from their local tax authority for the prescribed year 1 July 2019 to 30 June 2020.

The tax authority expects to pay valid 2018-2019 claims by 30 September 2020 and where this is not possible, it will write to the affected business.

Claims for the period 1 July 2019 to 30 June 2020 submitted without a certificate of status will not be immediately rejected but will be put on hold until 31 December 2020 (by which time the certificate of status should be submitted). If it is not possible to obtain the relevant certificate of status by 1 October 2020, businesses are advised to write to the tax authority for their case to be considered.

Businesses claiming refunds before 31 December 2020 are recommended to request a certificate of status as early as possible. Read more

DLA Piper comment: HMRC’s has shown a very flexible and sensible approach in these unprecedented times to ensure that businesses are not unfairly disadvantaged due to circumstances beyond their control.

Brexit: European Commission issues notice to stakeholders focussing on VAT on services

Between 1 February 2020 and 31 December 2020, a transition period is applicable to transactions performed between the EU and the UK. During this transition period the provisions of the Principal VAT Directive are applicable to transactions performed from and to the United Kingdom as if it was still a Member State. In relation to services, the most significant difference from the end of the transition period will be that to B2C supplies of services the non-EU scheme of the mini-one-stop-shop (MOSS) will apply, i.e. UK suppliers will be required to register in one of the Member States under the MOSS regime. A further change after the end of the transition period will be that cross-border VAT refunds between the UK and the EU Member States will be subject to the Overseas Refund Scheme (historically known as 13th Directive claims), instead of the Directive 2008/9. A practical consequence of this will be that the EU Member States may subject the refund to reciprocity from the UK. Additionally, the filing deadlines for the refund requests will differ depending on the Member State. Read more