FINANCE
Rupert Moyle, Partner and Head of VAT
Colin Laidlaw, VAT and Duty Director
Time to review if you are using it effectively for your business?
EU INTRODUCES NEW E-COMMERCE VAT SYSTEM The new e-commerce VAT system introduced by the EU on July 1st impacts the treatment and compliance associated with supplies of goods to and within the EU, in particular those sold to EU consumers (B2C). It is intended to ease the administrative burden and aid the collection of VAT in the EU and the new rules affect both EU and UK suppliers. As the festive selling period approaches and with attention here in the UK being focused on broader supply chain issues including driver shortages, have you considered the impact these VAT changes will have on your business, cash flow, stock management and broader supply chain in particular: n A re you meeting your compliance obligations within the EU? n A re you actually ‘over-doing’ your obligations, as these new rules simplify things? n Are you considering the effect your compliance is having on your customers and whether this is the best approach?
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EFFECT ON UK BUSINESSES In terms of what these changes could mean for UK businesses:
n In respect of a business established in Northern Ireland, its sales are above the €10,000 threshold.
n T here is an important distinction between consignments up to €150 and those in excess of this value. There are administrative considerations for collecting VAT within this threshold and more challenging obstacles to overcome for clearing goods through customs where imports exceed €150.
n In respect of a business established in Great Britain, it has any distance sales it makes between EU member states.
n Goods which are sold from outside the EU to consumers in the EU will be subject to VAT in the member state of import. A VAT amount collected from a customer on import may come as a surprise to them – the use of Import One Stop Shop, where applicable, can help to avoid this issue.
Businesses should consider how the changes may affect them, including whether the new schemes can be used to avoid customers incurring any unexpected VAT costs. Where the new schemes are utilised, costings and website terms & conditions would need to be reviewed for EU VAT that would become due at the point of sale.
n Goods which are sold from within the EU (including Northern Ireland) to consumers in other member states will be subject to VAT in the member state the goods are delivered to, where.
One Stop Shop registration can be utilised to avoid multiple VAT registrations in the member states where VAT may be due on such sales.
The Gov.uk website includes a number of examples of these new rules in practice.
