UK VAT after leaving the European Union (EU)

Introduction

Below is a summary of some of the key changes from 1 January 2021 for UK VAT registered businesses.

The information on this page is for guidance only and should not be taken as definitive VAT advice, since individual circumstances may vary. For details of your obligations for sales and purchases abroad, please refer to HMRC guidance.


Purchases of goods from the EU: by businesses in Great Britain (GB)

These are now classed as 'imports', in the same way as purchases of goods from the rest of the world.

Imports incur UK VAT.

You can pay import VAT on goods (not only from the EU but also the rest of the world) by:

  • Postponed VAT Accounting (PVA), which allows you to account and pay for import VAT on your VAT return, rather than at the point of entry into the UK. This is available to most businesses and operates by way of a monthly online statement of postponed VAT from HMRC.

  • Paying at the point of entry into the UK. This is normally done on your behalf through the shipping company or a customs agent.

You may also have to pay customs duty on imports, in addition to import VAT.

For guidance on accounting for import VAT on VT Transaction+ please see Purchases of goods from abroad.

Purchases of goods from the EU: by businesses in Northern Ireland (NI)

Under the Northern Ireland protocol, Northern Ireland is part of the UK VAT system whilst also maintaining alignment with EU VAT rules for movement of goods* (not services).

This means that purchases of goods from the EU to NI follow the same VAT treatment as existing rules for purchases of goods between EU member states (referred to as 'acquisitions').

Therefore 'acquisitions tax' needs to be accounted for on purchases of goods from the EU. Please see Purchases of goods from the EU to Northern Ireland for guidance.

*Movement of goods between GB and NI differs, see 'Movement of goods between GB and NI' below

Sales of goods to the EU: by businesses in Great Britain

This type of sale is now classed as an 'export' for UK VAT purposes, in the same way as sales of goods to the rest of the world.

Exports of goods are generally zero-rated for UK VAT, subject to certain conditions.

To account for VAT on exports in VT Transaction+, please see Sales of goods to outside the UK.

Sales of goods to the EU: by businesses in Northern Ireland

Under the Northern Ireland protocol referred to above, sales of goods from NI to the EU follow the same VAT treatment as existing EU rules for sales of goods between EU member states (referred to as 'dispatches').

Therefore:

  • Sales of goods to VAT registered EU customers are zero-rated for VAT

  • Sales of goods to non-VAT registered EU customers (known as distance sales) are subject to VAT in the country of the seller, if the sales exceed certain annual thresholds (otherwise they are subject to UK VAT).

Please see Sales of goods to the EU from Northern Ireland for guidance.

EC Sales Lists

EC Sales Lists are no longer applicable for businesses trading from Great Britain. However, if you are a Northern Ireland business selling goods to VAT registered EU businesses, you still need to complete an EC Sales List. Please see EC Sales Lists

Movement of goods between GB and NI

Under the Northern Ireland protocol referred to above, EU VAT rules for NI mean that goods moving between GB and NI are technically classed as exports and imports for VAT purposes. 

However, HMRC have deviated from this and treat transactions between GB and NI as domestic transactions within the UK for VAT purposes. Therefore they are subject to UK VAT in the same way as for normal purchases within the UK. Please see Sales of goods between Great Britain and Northern Ireland.

Reverse charge VAT on purchases of services from abroad

The principle has not changed, in that, if a service from an overseas supplier (whether they are from the EU or the rest of the world) is determined to take place in the UK under HMRC place of supply rules, it is subject to UK VAT, charged through the reverse charge mechanism.

For guidance on reverse charge VAT on services from abroad please click Purchases of services from abroad.