Weekly VAT News

Indirect tax news from the past week  


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Taxation (Post-transition Period) Bill: Northern Ireland Protocol

The Taxation (Post-transition Period) Bill was published on 8 December, together with explanatory notes. The Bill will introduce changes to VATA 1994 and TCTA 2018 to reflect the operation of indirect taxes under the Northern Ireland Protocol. It therefore sets out (for example) how NI businesses will account for acquisition VAT on supplies of goods from the EU, and introduces a customs duty charge where goods moved from GB to NI are at risk of being moved into the EU, or where goods which are not Qualifying Northern Ireland Goods are moved from NI to GB. HMT has also published supporting documents which include tax information and impact notes for VAT and customs. The House of Commons Library has published a research briefing on the Bill. The Bill had its second reading and Committee stage in the Commons on 9 December, and will have its final stages in the commons on 15 December. (Contact: Andrew Clarke).

Northern Ireland Protocol: Joint Committee Draft Decisions

A Command Paper provides further details of the agreement in principle by the Withdrawal Agreement Joint Committee over the operation of the Northern Ireland Protocol from 1 January. It confirms that, as a general rule, export or exit declarations will not be required for NI to GB movements of goods. Movements into NI will be “at risk” of entering the EU (and therefore subject to EU tariffs) if they are subject to commercial processing, unless they are moved directly by businesses in the food, construction, healthcare or non-profit sectors (or by small businesses). If goods from GB are not being processed, then they will not be “at risk” if they are duty-free in the UK, or if a business with a good compliance record is authorised to undertake that they are to be sold to end-consumers. The paper also refers to a UK Trader Scheme which will allows goods to be routed from GB to NI through ports in the Republic of Ireland under transit procedures, confirms that there will be no separate VAT registration for NI, and recognises concerns about margin scheme sales by GB businesses to NI customers. (Contact: David Walters).

Taxation (Post-transition Period) Bill: online sales

In addition to the changes in respect of Northern Ireland, the Taxation (Post-transition Period) Bill will introduce a new model for the VAT treatment of goods arriving into the UK from 1 January. This will include the abolition of low value consignment relief for goods arriving in GB (LVCR will continue to apply to an extent in NI), moving VAT collection away from the border for consignments not exceeding £135, placing the responsibility to pay VAT onto either an overseas seller or an online marketplace, and making online marketplaces liable for VAT on goods which are in GB at the point of sale. A TIIN is also available. (Contact: Phil Simmons).

SI 2020/1495: VAT at the end of the Transition Period

SI 2020/1495 makes a number of amendments to VAT rules which are expected to come into force on 1 January, which include: 

·       A requirement for businesses delaying full customs declarations for imports from the EU until the end of June 2021 to include import VAT on their VAT return (Postponed Import VAT Accounting);

·       Recovery of UK VAT incurred before the end of Transition Period by EU businesses;

·       Winding down the UK Mini One Stop Shop; and

·       Where "Exit day" is referred to in Brexit-related SIs, it should now be taken as a reference to the end of the Brexit Transition Period.

(Contact: Donna Huggard)

RCB 20(2020): certificates for Thirteenth Directive claims

Overseas non-EU businesses seeking to reclaim UK VAT through the Thirteenth Directive for 2019/20 need to submit an application together with a certificate of status from their domestic tax authority by 31 December 2020. In light of difficulties in obtaining required certificates (due to COVID-19), HMRC have announced in RCB 20(2020) that businesses will have an additional six months to submit a valid certificate (i.e. until 30 June 2021). The application itself and all other documentary evidence required to process the 2019/20 claims must still be submitted by 31 December 2020. (Contact: Alistair Lord).