Export & Import VAT on Goods – Business 2 Business’ (B2B) Zero Rate VAT

There is no VAT to be charged on goods exported outside the UK & Northern Ireland.  The UK Company must fill in C88 export declaration form before the goods are exported and have prove that the goods have left the UK, such as shipping certificate as an example.

Import Goods B2B

The UK Company or Northern Ireland will have options for paying the import VAT, most companies use postponed VAT Accounting scheme where no import VAT is payable.

Pay at the point of entry -The freight pays the import VAT and gets reimburse by the UK Company.

Deferment scheme (DAN) where you will be charged VAT by HMRC after 30 days. You will need to apply for Deferment authorisation number (DAN) issued by HMRC.
The company can claim the VAT on their return once they have obtained C79 import certificate invoice of the VAT to support the input VAT deduction in box 4. This DAN is usually issued if you have good credit and paid all your VAT on time in the past.

Postponed VAT (PIVA) scheme introduced in 01-01-2021 by HMRC, no VAT is actually paid, claimed in C88, the VAT is accounted for it on the VAT return i.e., box 1 as output and Box 4 as input VAT and Box 7. Notice here no need for C79 form instead you will download your postponed statement know as Monthly postponed Import VAT (MPIVS) from HMRC online as proof. Given you cash flow saving.

Here’s how PIVA works:

1. Importing Goods: When goods are imported from outside the UK, import VAT is usually due at the point of entry. With PVA, if you’re VAT registered, you can use your VAT return to account for the import VAT rather than paying it at the border.
2. Declaration Process: When making customs declarations, you’ll need to indicate that you’re using PVA. Your EORI number (Economic Operator Registration and Identification) and VAT registration number will be linked to facilitate this.
3. VAT Return: The import VAT is accounted for and recovered in the same VAT return. This means it’s a cash flow advantage as you don’t have to pay the import VAT upfront. It’s declared in both Box 1 (VAT due on sales) and Box 4 (VAT reclaimable on purchases) of your VAT return.
4. Records and Compliance: Proper records of imports and VAT accounting need to be maintained. Compliance with HMRC guidelines is crucial to avoid penalties or issues during audits.

The same rules apply to Northern Ireland when importing from non-EU countries.

Northern Ireland with EU Countries

When selling goods from EU-to-EU B2B then is zero rated as long as you obtained the VAT numbers for both companies.

Certain forms must be obtained by the selling company i.e., Northern Ireland Co such as ESL/SSD these are not tax issues but are A Safety &

Security Declaration (SSD) is used by border authorities to analyse the potential risk caused to their territory by goods crossing their border.

Now let us consider the opposite, where an EU Country selling goods to Northern Ireland.

The same as above the goods are zero rated. If Northern Ireland send their VAT number to the other EU Company. Therefore, the Northern

Ireland will account for Acquisition tax. Entry the VAT on box 2, box 4, box 7 and box 9.

 

Great Britain selling goods to Northern Ireland

Is normal as selling goods in the UK Companies but is Know as Import VAT for Northern Ireland.

Paperwork needed are as follows.

Intrastats

Monthly summary of goods moving between Northern Ireland and EU if certain limits exceeded.

EC Sales Lists

EC Sales List a report that you must send to HMRC when you sell goods from Northern Ireland EU. Can be done monthly or yearly depends on certain limits. B2B

B2C – Business to consumer – Small Consignment goods

Goods sold to UK consumer ONLINE up to £135, the overseas company will need to register for UK VAT. Unless they use company like

Amazon, where Amazon can pay the VAT and keep the overseas company out of UK VAT registration needs

If the Overseas company selling directly not online to UK Consumer, then the VAT is payable at the point of sale.

If the VAT was not paid, then the freight company will need to charge the Consumer the VAT before the goods are given.

B2C – Business to consumer

The VAT is accounted for in the OSS Return. One Stop Shop allow all VAT charged for different EU country to be submitted under one VAT return know as One Stop Shop.

If the total NI Co sales is < Euro 10,000 per year to other EU country e.g., France. Then they can charge UK VAT at point of sale.

 

E-Commerce Goods up to Euro 150 from 1st July 2021

The GB Company will need to account for the VAT collected through ISSO – Import One Stop Shop.

Or if they are using Online Market such as Amazon, then Amazon will handle the VAT collection and account for it.

Import one stop shop:

Is a simplification for consignment up to Euro 150, it is not mandatory, but it has a significant advantage.

The GB Company will need to appoint an intermediary in an EU Member State to deal with the IOSS registration and monthly return.

Significant the ISSO registration number will accompany the goods through customs with details of the VAT charged at the point of sale. This will speed customs clearance.

The GB Company will report and pay the monthly VAT charged to EU Country. The alternative to ISSO is the old postal import system, but the ISSO is much better to use.

OMP – Online Market Places.

From 1st July 2021 the OMP can charge and account for the VAT on behalf of the Gb Company at destination VAT rates. As the OMP becomes the deemed supplier. And this removes the need for the GB Company to register and use the ISSO.

If the GB Company use their own website, then they charge VAT at the point of sale and account for it through ISSO.

Here the postal import VAT system is used. Where the GB Co will sale the goods at zero rate and the customer in the EU country will be charged VAT at their country by the postal import system before goods are released.

Refund under the 13th Directive (VAT Incurred in EU by UK Company Individual)

UK company send their worker to An EU Country, all input VAT incurred such as hotel bills and etc, can be claimed through paper-based 13th Directive claim procedures, these are manual claims sent into each member estate using their 13th Directive claim procedure.

Same other EU members estate can submit 13th Directive to HMRC to claim back input VAT incurred by EU Individual.

Claims for year of 30 June with a 31 December deadline.

Nutshell:

International Goods:

No VAT charged by seller – Export B2B

VAT is added by purchaser in the destination country B2C

GB and NI sales are treated as normal UK sales (seller charges VAT; purchaser reclaims VAT)

 

Working with International Goods – Export & Import VAT

Does the above sound too complicated? Not sure on the treatment of VAT. Tax Accountants Slough are only a phone call away and will offer tailored advice according to your unique circumstances.