VAT checklist - moving goods from GB to NI from 1 January 2021

Guide

From 1 January 2021, the Protocol on Ireland / Northern Ireland comes into force and there are certain steps you must take now to comply with new VAT rules.

VAT checklist

Follow this checklist to help your business prepare for the VAT changes from 1 January 2020:

  1. Read the latest UK government VAT guidance and seek professional advice. See accounting for VAT on goods moving between Great Britain and Northern Ireland from 1 January 2021 or speak to your accountant or financial adviser.
     
  2. VAT on the movement of goods between GB and NI will continue to be accounted for as it is now. This means the seller of the goods will continue to charge VAT and show this on its invoices. The VAT charged will be accounted for as output tax. The buyer of the goods will be able to claim this as input tax, subject to the normal rules.

    When a VAT registered business moves its own goods from GB to NI, VAT will be due. The business will need to account for VAT on the movement, this should be included as output tax on the VAT return. Where the goods are being used for taxable sales, the VAT may also be reclaimed as input tax on the VAT return (subject to the usual rules).

    There are no changes to the existing rules for non-VAT registered businesses in NI. They will continue to pay VAT on GB purchases but are not eligible for a reclaim from HMRC.
     
  3. EU rules on VAT will continue to apply to NI. They will continue to zero-rate dispatches to an EU Member State and must retain evidence in line with existing rules. Where a VAT registered business purchases goods from an EU Member State, they will continue to account for acquisition tax on their UK VAT return.

    You should review your supply chain and check if you currently utilise either:
    Special Customs Procedures
    Domestic reverse charge rules
    Onward Supply procedure
     
  4. GB will become a third country from 1 January 2021, goods sourced from GB will no longer qualify for EU VAT simplifications.

    If your business uses:
    • Triangulation, or
    • VAT Margin schemes

    You should evaluate your financial flexibility to absorb any new costs.
     
  5. Rules are also changing for commercial online sales based outside the UK or EU. VAT will be treated differently depending on the location of the seller, value of the consignment and if they are VAT registered or not. You should familiarise yourself with the online marketplace guidance which includes options and instructions for postponed VAT accounting.
     
  6. Movements between fiscal warehouses in GB and those in NI will no longer be treated as a VAT-free movement. You should liaise with any GB-based suppliers to ensure they are prepared for this change.
     
  7. HM Revenue & Customs (HMRC) will determine if a NI VAT registered business is operating under the Protocol and therefore qualifies for VAT simplifications and zero-rating dispatches. If you are trading with the EU, you will need to put an ‘XI’ prefix (instead of GB) in front of your VAT number when communicating with an EU customer or supplier, this may require a new process or system update. You will also continue to complete an EC sales list when selling goods from NI to VAT-registered customers in the EU.

Your VAT checklist summary:

  • Read new VAT guidance and/or speak to your accountant.
  • Review your supply chain.
  • Review your B2B online marketplace sales from outside the UK and EU.
  • Communicate with any GB fiscal warehouses who supply your NI fiscal warehouses.
  • Check that HMRC has identified your business as operating under the Protocol.