Following the end of the transition period on 1 January 2021, many businesses are taking on the challenge of overseas accounting for the first time.
To support your business, we’ve answered some of the most common questions we’ve received over the past month.
Is VAT applicable on the purchase of a service from EU countries?
Providing the place of supply is the UK, there are no changes to the purchase of services from the single market. You should give your UK VAT number to the supplier so that they do not charge VAT. Any VAT due will be dealt with as if you had supplied the services yourself.
Is VAT applicable on the purchase of goods from EU countries?
Goods purchased from the single market are now considered “imports”. This means the VAT applicable depends on who is responsible for declaring the goods and paying import VAT.
You must give the supplier your UK VAT number and EORI number to ensure you are not charged twice. The postponed VAT accounting scheme has been introduced to help UK businesses pay VAT without disrupting cash flow.
Is VAT applicable on the purchase of a service from non-EU countries?
As we have left the single market, the treatment of services from EU and non-EU countries are now the same.
Is VAT applicable on the purchase of goods from non-EU countries?
Like services, the treatment of goods from EU and non-EU countries are now the same.
Is VAT applicable on the sale of services to EU countries?
There are currently no changes to the treatment of services sold to the EU. You should obtain your business customer’s VAT number and not charge any UK VAT on the supply.
Is VAT applicable on the sale of goods to EU countries?
Goods exported to the single market are now considered “exports”. This means the VAT applicable depends on who is responsible for declaring the goods and paying import VAT.
Sales from the UK will be zero-rated if you can prove that the goods have been removed from the UK. If you are responsible for the declaration of goods and paying import VAT, you may be required to register for VAT in the EU country.
What is the non-union VAT Mini One Stop Shop?
Replacing the UK VAT Mini One Stop Shop (MOSS), the non-union VAT MOSS will allow exporters of digital services to the EU to account for VAT in just one country, rather than in all countries of sale. Businesses who exported or plan to export digital goods in January must register before 10 February to benefit from the scheme.
How can I claim a VAT refund in the EU?
UK businesses will no longer be able to recover VAT incurred in other EU countries using an electronic system. VAT refunds can instead be reclaimed using the existing refund system for non-EU businesses.
How can I check if an EU VAT registration number is valid?
Use the EU VAT Registration Number Validation service to check if a customer or supplier’s VAT number is valid. You can no longer check a UK VAT registration number using this service, but HMRC offers a similar service for checking a UK VAT registration, which can be found here.
Reanda UK is a subsidiary of leading independent accountancy firm Grunberg & Co Limited. Our aim is to help businesses and individuals to navigate the UK’s world-renowned business and tax infrastructure, and to support them with their international ambitions. To find out how we can help you, please contact us.
UK applies to join Comprehensive and Progressive Trans-Pacific Partnership
The UK has formally applied to join the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) – one of the largest free-trade areas in the world.
The International Trade Secretary, Liz Truss, said membership would give UK businesses unrivalled access to some of the fastest-growing markets, including Japan, Mexico, Malaysia and Vietnam.
Here’s what you need to know about the CPTPP.
Why are we joining the partnership?
The latest statistics suggest that UK trade with CPTPP countries is already worth around £111 billion – up eight per cent since 2016.
But joining the £9 trillion partnership will cut tariffs for many UK industries, including tech, food and drink, and automotive, making products and services cheaper to import and export.
What are the benefits of joining?
“Modern digital trade rules” that will remove unnecessary barriers for businesses and protect commercial source code and encryption
The free flow of data between participating countries
Eliminating tariffs quicker on UK exports
Rules of Origin that allow content from any country within CPTPP to count as ‘originating’
Easier travel between CPTPP countries and the potential for faster and cheaper visas
How does CPTPP and EU membership differ?
Unlike EU membership, membership to the CPTPP does not require the UK to give up control over its laws, borders or money.
What do the experts say about the deal?
Commenting on the report, Julian David, CEO of techUK, said: “Today marks an important step in the UK’s path to developing a modern trade policy that creates new opportunities for the UK tech sector. Building on our recent agreements with Japan and the European Union, the accession to the CPTPP will allow us to join a group of ambitious countries breaking the newest ground in digital trade.”
Welcoming the announcement, Mike Cherry, Federation of Small Businesses (FSB) Chair, added: “Membership of the CPTPP would be a hugely welcome development to all small businesses looking to either expand or begin their trading journeys.”
When will we join the CPTPP?
According to the International Trade Secretary, “formal negotiations” to join the market will “start this year”.
Reanda UK is a subsidiary of leading independent accountancy firm Grunberg & Co Limited. Our aim is to help businesses and individuals to navigate the UK’s world-renowned business and tax infrastructure, and to support them with their international ambitions. To find out how we can help you, please contact us.