17th March, 2021, Henry Pettitt
With the news that the UK is now officially out of the EU, there are significant adjustments in play for businesses that use export operations and consideration needed for post-Brexit VAT rules.
The rules for supplying services between Great Britain and EU members states are now the same as the rules for supplying services from the UK to outside the EU.
In considering whether VAT should be charged on exports, two distinct areas are affected, the supply of goods and the supply of services, each with different aspects to take into account.
The supply of services depends on who the supply is being made to as there are different rules for business to business and business to consumer.
For a business supplying to a customer the place of supply (where it is happening) is where the supplier belongs, irrespective of the location of the customer. If you are a business supplying to a business the supply is made where the customer belongs. Supplies of services related to land are generally considered to be made where the land is located.
If the supply is in the UK it is subject to UK VAT, which must be charged and accounted for if due. If the supply is in an EU member state it is outside the scope of UK VAT, meaning you or your customer may be liable to account for any VAT due in the EU member state and in some cases requiring the UK business to register for VAT in the member state.
If you sell, send or transfer goods out of the UK you do not normally need to charge VAT. This is called zero rating. Zero rated goods are still VAT taxable, but the rate VAT businesses must charge to customers is 0pc. Appropriate export documentation must be maintained in order to prove the goods were consumed outside the UK.
Zero rate exporting applies from Great Britain to any destination out of the UK and from Northern Ireland to outside the UK and EU. Care must be taken to account correctly for any supplies of goods that are routed via Northern Ireland.
In addition to the UK VAT rules, businesses and individuals need to take account of relevant import duties levied in the destination country.
The government’s advice is to hire a customs broker, freight forwarder or similar to help with customs relating to importing and exporting, but it helps to have a friendly and reputable accountant to guide you along the way.
SME Brexit Support Fund
The SME Brexit Support Fund is a government grant scheme that opened for applications on the 15 March and will close on 30 June, unless the £20 million set aside has been utilised by then.
The grant is for up to £2,000 to pay for practical support including training or professional advice in the wake of Brexit. This can be used to cover fees associated with getting specialist advice from accountants or business advisors.
The eligibility criteria is pretty broad with businesses qualifying if they have fewer than 500 employees and no more than £100 million annual turnover and export or import with the EU.
Find out more and apply for the SME Brexit Support Fund.
If you wish to discuss anything in this article or if we can support you with professional advice please contact us.
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