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Brace for Brexit: Your questions answered

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Neil Warren and Jason Croke took their popular Brace for Brexit series to Any Answers Live and answered the audience’s most pressing indirect tax questions.

4th Dec 2020
Editor AccountingWEB
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The authors of  the Brace for Brexit series joined AccountingWEB Live last week to summarise some of the key VAT and customs changes afoot come 1 January 2021 and fieled a barrage of viewers’ questions.

The questions ranged from whether they should advise clients to register for VAT in mainland Europe, to distance selling and how Brexit will affect micro-businesses. 

The answers below are an abridged version of Jason Croke from Rayner Essex and Neil Warren’s responses. You can hear the full answers to these questions and many more on issues such as B2B services and Northern Ireland by watching the Any Answers Live episode on demand

Are we expecting many UK firms to have to register for VAT equivalents in other EU countries? Can you confirm which scenarios we need to look out for?

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Replies (7)

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By mominnz
09th Dec 2020 10:07

Can some one make a quick guide instead of reading through scenario based questions which would be helpful.

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Replying to mominnz:
Jason Croke
By Jason Croke
17th Dec 2020 10:26

Apologies for delay in replying.

It's not so easy to do a guide that covers everything, HMRC have already done that and it runs to over 160 pages.

The Brace for Brexit series of articles were drafted by Neil and I and designed to cover the key changes that will affect most businesses. We discussed at length what are the key matters and those discussions are reflected in the articles.

I did try and do a summary for my own clients but there are so many deviations - B2C sales, what about plants and livestock, CE certification, some businesses will need an EU entity if they trade in certain goods like cosmetics or medicines, digital sales under MOSS, the imposition of One Stop Shop by the EU later this year, there isn't really a one pager that covers everything and if we take that content out to keep it short then we may mislead the reader into thinking there isn't a problem for them.

Thanks (1)
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By RogerMT
09th Dec 2020 10:10

UK VAT reg supplier currently supplying consultancy services to EU VAT reg customer. Reverse charge currently applies. After 1/1/21 (assuming no deal) the supply is outside scope of VAT, so "No VAT" instead of "ECS" VAT letter. Does reverse charge still apply at the customer's end?

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Replying to RogerMT:
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By RogerMT
09th Dec 2020 10:17

To be clear, I mean "No VAT", or whatever the particular book keeping system uses for "outside of scope" - sometimes "O" or "N". Not "ZR".

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Replying to RogerMT:
Jason Croke
By Jason Croke
17th Dec 2020 10:30

Apologies for delay responding RogerMT

Yes, reverse charge still applies at the EU customers end, so the customer accounts for VAT on their EU VAT return.

As it does in the UK if UK business buys services from EU seller, an exempt or unregistered UK business buying services from EU supplier, the EU supplier will treat as outside scope, UK business then has to reverse charge that and if it takes the business over the £85k VAT registration threshold, the UK business has to register for VAT.....mostly catches out charities and unregistered traders who buy a lot of services from non-UK sources.

...and yes, supply is outside the scope but we still want the net value in Box 6 of the VAT return, so some software doesn't put outside the scope (old T9 in sage) onto the VAT return, Xero/QB does have a code for reverse charged services and will therefore populate Box 6.

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By Grizzler
13th Dec 2020 20:48

Couple of questions which I am getting contradicting answers to.
I was under the impression that all business that are categorised as third countries making distance sales have to register for EU vat and submit declarations under something similar to MOSS. If this is the case what mechanism is there for registering and submitting returns.
Do business to business exports have to be declared on an EU vat return? Are there anymore VAT administration implications for exports to the EU than say an export to the USA?

It seems to me that everything is deliberately vague by govt\eu. Not much help for business who want to do things correctly and simply. Any answers really welcome

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Replying to Grizzler:
Jason Croke
By Jason Croke
17th Dec 2020 10:37

Business to business services, place of supply is where the customer is (unless land related/live event, etc).

If a UK business today buys services from outside the EU, no VAT is due, no requirement for supplier to register for VAT here, the recipient reverse charges (if a business). There is no change from next year, UK business buys from USA or France, service is where customer is (UK), UK accounts for VAT as it always has.

MOSS is a specific rule for digital sales to EU consumers (B2C), so a non-EU business selling apps, downloads or online digital services to EU customers would have to register for MOSS in an EU member state. As the UK falls outside of the EU next month, then any business that already has a UK MOSS registration would have to deregister for UK MOSS and register for MOSS somewhere in the EU, like Ireland or Malta.

there are some aspects that are vague, but there are also some things that have been published ages ago - the issue is, HMRC sometimes change what they've published so you run the risk of reading an article (or worse, advising a client), going "yes, understand" and then a month late the guidance changes and then it is "oh, so now I have to register for this service before I can do what I previously understood", so there is an air of caution in articles on the web and from Accountants because nobody wants to get it wrong.

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