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Brace for Brexit 12: EU simplifications

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Jason Croke considers the loss of VAT simplifications that we have taken for granted while the UK was an EU member, but which will no longer be available to businesses from 1 January 2021.

2nd Dec 2020
VAT Director Rayner Essex
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Triangulation

Take the situation of a UK business which sells buckets. It doesn’t manufacture them; it orders them from a specialist manufacturer in France. The UK business orders stock for its UK warehouse, the French supplier ships to the UK and the UK business sells the stock to UK customers.

Pre-Brexit that would have been an intra-EU supply, the French supplier zero-rates and the UK customer accounts for VAT on their VAT return. Post Brexit, this will be a zero-rated export and either seller or buyer is responsible for import VAT and import duty.

But what if the UK bucket supplier takes an order from a German business customer? Rather than order from France, to ship the buckets to UK, only to onward ship to Germany, it would make sense (and save money) to ship the goods from France to Germany. Pre-Brexit this transaction would have operated under triangulation.

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Replies (5)

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By NBWNBW
03rd Dec 2020 10:50

In the triangulation diagram, aren't A and B in the wrong boxes?

Thanks (2)
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By BlueNose1812
03rd Dec 2020 11:24

Wouldn't it be possible to make a voluntary registration in say Eire ( they speak english) get an EORI number and then make all EU sales and purchases via that virtual office and thereby make everything much simpler?

Thanks (1)
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By richards1
03rd Dec 2020 11:28

Make your buckets in the UK

Thanks (0)
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By okosling
03rd Dec 2020 18:15

What if the UK company is actually in Northern Ireland (or establishes a branch there), which in some respects continues to be as if it was part of the EU?

Thanks (0)
By Kentwillumsen
04th Dec 2020 10:19

Most of the above "simplifications" does not apply to most UK companies.
Once the UK is out of the EU, trade with the EU is either export or import, very simple.
If drop-shipments, call-off or consignment stock is needed in the EU, then setup a legal entity/subsidiary within the EU or find a EU reseller.

Thanks (0)