Your VAT return Before & after Brexit - Accountant briefly explains

VAT impact on trade with EU

UK importers from EU may have a big negative cash flow impact to their trade depending on UK-EU negotiations and subsequent UK legislation. When importing £1,000 of VATable goods from Eire or France £200 VAT would need to be paid to H M Revenue & Customs when the goods are landed in UK.

There is a proposal to defer the UK VAT payment date until the date of the next VAT return. This would help the VAT payable on imports to be ‘matched’ with VAT payable on sales.

EU buyers of UK goods may need to appoint agents in the EU countries to deal with local VAT regulations which are likely to be similar to those in UK; the buyer needing to pay EU VAT when the goods are landed. Exporting £1,000 of goods to Eire or France local regulations VAT would need to be paid by the customer to the Irish or French VAT authorities when the goods are landed in the EU country.

There is a proposal that EU countries defer the VAT payment date until the date of the next VAT return. This would help UK exporters to compete with EU suppliers and is clearly a point subject to UK-EU negotiation.

There could be changes to VAT returns depending on the outcome of UK-EU negotiations and subsequent UK legislation.

VAT can be really difficult and each trader needs to become an expert in his or her own trade. I hope that we can help you through the changes.

UK VAT - European countries inside and outside EU — UK VAT - European countries
inside and outside EU

VAT 27 EU member list and VAT rates

Ref - Country	Standard VAT rate Other rates apply by specific category Full EU VAT details 137 pages	Currency
AT-Austria	20%	Euro
BE-Belgium	21%	Euro
BG-Bulgaria	20%	Lev
HR-Croatia	25%	Kuna
CY-Cyprus	19%	Euro
CZ-Czech Republic	21%	Koruna
DK-Denmark	25%	Danish Krone
EE-Estonia	20%	Euro
FI-Finland	24%	Euro
FR-France	20%	Euro
- and Monaco	20%	Euro
DE-Germany	19%	Euro
EL-Greece	24%	Euro
HU-Hungary	27%	Florint
IE-Ireland	23%	Euro
IT-Italy	22%	Euro
- and San Marino	0% - 17% Monofase tax applies to imports	Euro
LV-Latvia	21%	Lats
LT-Lithuania	21%	Litas
LU-Luxembourg	14%	Euro
MT-Malta	18%	Euro
NL-The Netherlands	21%	Euro
PL-Poland	23%	Zloty
PT-Portugal	23%	Euro
RO-Romania	19%	Leu
SK-Slovakia	20%	Euro
SI-Slovenia	22%	Euro
ES-Spain	21%	Euro
SE-Sweden	25%	Krona

Current VAT return boxes (VAT100) are:

VAT Box	VAT Return description	Our notes	£
(Box 1):	VAT due in this period on sales and other outputs	+ Payable	£
(Box 2):	VAT due in this period on acquisitions from other EC Member States Our note: This is an in and out pay/reclaim transaction but the reclaim could be disallowed	+ Payable include "-" in (Box 4):	£
(Box 3):	Total VAT due (the sum of boxes 1 and 2)	=	£
(Box 4):	VAT reclaimed in this period on purchases and other inputs, (including acquisitions from the EC)	- Reclaim	£
(Box 5):	Net VAT to be paid to HM Revenue & Customs or reclaimed by you (Difference between boxes 3 and 4)	= Pay this	£
(Box 6):	Total value of sales and all other outputs excluding any VAT. Include your box 8 figure	Statistical	£
(Box 7):	Total value of purchases and all other inputs excluding any VAT. Include your box 9 figure	Statistical	£
(Box 8):	Total value of all supplies of goods and related costs, excluding any VAT, to other EC Member States	Statistical and VAT101 form	£
(Box 9):	Total value of all acquisitions of goods and related costs, excluding any VAT from other EC Member States	Statistical	£
	VAT101 to report the value of goods and services supplied to VAT-registered businesses in EU member states, by customer with their EU VAT number.
	After completion of Brexit there may be the need to include additional Lines on form VAT 100 Value Added Tax Return:		£
	VAT due in this period on acquisitions from non EC Member States		£
	There could be new lines applicable to Northern Ireland		£

Changes due to Brexit

Normal terms
VAT is payable to HM Revenue & Customs when goods are imported to UK.
VAT registered traders charge VAT-on-all-applicable-sales, Outputs Tax, in UK and pay this to HM Revenue & Customs after deducting VAT-paid-out, Inputs Tax.
VAT is not charged on exports.
EU terms
There have been special terms for UK-EU imports and exports which may no longer apply.
EU aspects
VAT is a fundamental part of the European Union EU.
UK were obliged to adopt VAT as terms of joining in the European Union EU in 1973.
Operating within parameters set by EU VAT directives.
Interpreted by Court of Justice of the European Union CJEU
After Brexit
Although outside the parameters set by EU VAT directives, UK is unlikely to discontinue VAT because it is a widely adopted tax in the wider international community - about 160 other countries.
Keeping the VAT system is part of Government policy.
UK may break loose of minimum and maximum VAT rates set by EU.
UK may may change the compulsory VAT registration threshold
The UK compulsory VAT registration threshold of £85,000 is scheduled for review April 2022.
Interpretation will be with UK’s Courts but it will be normal legal practice for UK judges to take account of the Court of Justice of the European Union CJEU’s, and it’s predecessor’s, decisions which have evolved over 47 years.
Subject to UK-EU negotiations
VAT may be payable to HM Revenue & Customs when goods are imported to UK from the 27 EU counties.
VAT may be payable by EU buyers when goods are exported to the 27 EU counties from UK.
UK Government proposal to defer import VAT from the date of import to the date of the VAT return.
This method of VAT on import is proposed for all countries not just EU.
UK is proposing that EU adopt the same procedure with UK.
Alternatively UK exporters to EU may need to appoint import agents in the EU countries.
Online traders selling to the 27 EU countries
Pending clarification we are suggesting that, for the sake of continuity of your business, you continue, as before, but change your documentation to show the local country VAT addition from 01/01/2021. I guess this will often be 20% approximately.
It is a point of negotiation whether EU will be willing to accept UK HM Revenue & Customs as an agent for collecting their tax.
As long as you have collected the VAT and are ready to remit it to the appropriate country this should not be a problem.
Bearing in mind that you will not have to account for VAT until February 2021 or later there should be time to set up the appropriate framework.
If you supply to EU digitally
If you supply to EU digitally there should still be the Non-Union VAT Mini One Stop Shop MOSS in which you register in one EU country and prepare a quarterly return in that one country for all of the EU members. The Republic of Ireland Éira may be a good choice for UK traders.
UK guidance is at:
Non-Union VAT Mini One Stop Shop MOSS