by Jason Gorringe, Tax-News.com, London
18 February 2019
The UK Government has released VAT guidance for businesses on how existing IT processes will be impacted should the UK leave the EU on March 29, 2019, without a deal.
The guidance explains that, in the event that the UK leaves the EU without a deal, from 11pm GMT on March 29, 2019, many UK businesses will need to apply the same processes to EU trade that apply when trading with the rest of the world.
The main changes for businesses will be to the processes for obtaining VAT refunds from EU countries and how to report sales of digital services to EU consumers.
After March 29, businesses must claim VAT refunds from EU member states by using the relevant member state’s existing process for businesses based outside the EU. This includes outstanding claims that relate to 2018 expenses, and claims relating to 2019. Those wishing to use the EU VAT refund electronic system to submit a refund claim for 2018 will need to do so by 5pm on March 29, 2019.
The guidance says businesses must familiarize themselves with the process for each EU member state, as such can vary. For example:
- the deadline for making a claim may be different;
- taxpayers may need to supply a certificate of taxable status to support their claim;
- taxpayers may need to appoint a tax representative in the EU member state of refund.
Next the guidance explains that suppliers of electronic services to EU consumers will no longer be able to use the UK’s mini one stop shop scheme to simplify their compliance arrangements.
The guidance further notes that, when the UK leaves the EU, all supplies of digital services to consumers in EU member states will become liable for VAT in the consumer’s member state. The GBP8,818 annual threshold for cross borders sales of digital services to EU consumers will no longer apply. That means that businesses will have to charge VAT at the rate where their customer is based and declare those sales to the relevant EU member state. To declare the VAT charge, the business must register for VAT in each EU member state where sales are made or register for the VAT MOSS non-Union scheme in an EU member state of their choice.
Businesses can use the UK’s VAT MOSS to declare sales of digital services to consumers in the EU only up until the first quarter of 2019. This return should include supplies made between January 1, 2019, and 11pm on March 29, 2019. The normal submission deadline of April 20, 2019, will apply. However, they will need to sign up to a different EU state’s MOSS service by April 10, 2019. Businesses will be automatically deregistered from the UK VAT MOSS from April 1, 2019.
Finally the guidance notes that those wishing to check the validity of UK registration numbers will be able to do so via the GOV.UK website from March 30, 2019.