HMRC has issued guidance on changes to the rules and processes for VAT IT systems in the event that the UK leaves the EU without a deal. From 11pm GMT on 29 March 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 guidance impacts on businesses that:
- claim VAT refunds from EU countries
- need to check the validity of UK VAT registration numbers
- report sales of digital services to consumers in the EU using the UK VAT Mini One Stop Shop
- are under the VAT digital services threshold and make sales of digital services to consumers in the EU
In summary the changes are as follows. However, if you are affected please read the detailed guidance on HMRC’s website.
Claiming EU VAT refunds
Refund claims for 2018 must be submitted by 11pm on 29 March 2019. If claims are submitted after that, HMRC will not be able to send your claim on to the relevant EU member state.
After 29 March, VAT refunds from EU member states must be claimed by using the relevant member state’s existing process for businesses based outside the EU.
The requirements of each state may vary in terms of deadlines, evidence and the need for a tax representative.
Checking a VAT number
From 30 March 2019:
- UK-only VAT registration numbers can be checked on GOV.UK .
- Businesses can continue to use the VIES system to check the validity of EU VAT numbers
Using the UK’s VAT Mini One Stop Shop
Businesses using the UK’s VAT Mini One Stop Shop (MOSS) to declare sales of digital services to consumers in the EU should continue to use the UK’s MOSS portal in respect of sales made between 1 Jan 2019 and 11pm on 29 March 2019 (the quarter 1 2019 return
However, after the UK leaves the EU these businesses will need to register for MOSS in an EU member state. To allow this, they will be automatically deregistered from the UK MOSS system with effect from 1 April 2019.
Sales of digital services in the EU and UK after 29 March 2019
UK businesses currently using the UK VAT MOSS Union scheme can continue to use the MOSS system but must register for the VAT MOSS non-Union scheme in an EU member state.
If you want to continue to use MOSS, you must register for the scheme by the 10th day of the month following your first sale after the UK leaves the EU. For example, register by 10 April 2019 if you make a sale between 29 and 31 March.
UK businesses will only be able to register after 29 March 2019. Alternatively, you can register in each EU Member State where you make sales.
Non-UK businesses currently using UK VAT MOSS non-Union scheme will need to register for the scheme in an EU member state.
Non-UK businesses will need to declare sales of digital services to UK consumers by registering for VAT in the UK and declaring the sales via a UK VAT return.
Digital services threshold
When the UK leaves the EU, all supplies of digital services to consumers in EU member states become liable for VAT in the consumer’s member state. The £8,818 annual threshold for cross borders sales of digital services to EU consumers will no longer apply.