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Tax on EU Acquisitions (Box 2)

What rate should be applied on box 2?

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Our computer software support department have thrown a spanner in the works with regards to VAT due on EC acquisitions. I'm in the middle of doing our VAT return:

Now from my understanding you are meant to add 20% VAT on goods purchased from an EU VAT registered supplier. We don’t do that so everything comes in at 0% (we have never done it since I joined and I've not found out why?!).

Now because we have not claimed VAT on any EC purchases then would it mean that the rate for VAT Due on EC Acquisitions should in fact be 0%?

Our Computer software company are saying that the figure should remain 20% but I believe it should be 0%. I feel like this would make us worse off as the 20% rate on box 2 would decrease what we are owed back from HMRC. FYI - we are always entitled to a refund from HMRC as the majority of our goods are shipped abroad to foreign businesses.


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By jcace
07th Oct 2019 14:21

Per HMRC guidance:
If you’re registered for VAT in the UK and receive goods from other countries in the EU you’ll normally account for the VAT through your VAT Return. You’ll need to account for the VAT at the same rate that you would have paid if you had bought them from a UK supplier (this is the amount that will go into Box 2). This VAT is known as acquisition tax and you can normally reclaim this if the acquisitions relate to VAT taxable supplies that you make.
The amount you enter in box 2 isn't determined by the amount of VAT you reclaim, but rather the other way around. The Box 2 entry is what is required first.

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Replying to jcace:
By [email protected]
07th Oct 2019 14:27

Jcace - Yes i've seen this online elsewhere but our system has been set up to zero rate any goods received in from EU VAT Registered businesses. Therefore I don't see how it would net off the VAT due on EC Acquisitions if 20% was applied?

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Replying to [email protected]:
By Wilson Philips
07th Oct 2019 14:57

Your system has been incorrectly set up, then. Assuming that the goods would be standard-rated if sold in the UK, then you should be accounting for output (acquisition) tax at 20%. But it doesn't make you any worse off, as you should then be able to recover the same 20% as input tax - provided that none of your sales are exempt.

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