Cross-border VAT issues have been very much in the press lately, with Brexit and the various controversies surrounding it. This is especially relevant here in Northern Ireland.
While Boris Johnson and the EU have agreed a special protocol for Northern Ireland, giving us free and unimpeded access to the EU single market, even now, there is still considerable doubt about transit of goods from the rest of the UK to NI, and what paperwork and other considerations will affect trade across the Irish Sea.
From what we already know, it is clear that the new rules are complicated and we will all have to get through the inevitable teething troubles.
Our Director, Ciaran McGee, successfully secured a Certificate from Chartered Accountants Ireland as a Customs Adviser in 2021, with a particular focus on the issues arising from Brexit.
This means that Ciaran is exceptionally well-placed to advise on the interaction of the new Customs and VAT rules taking effect in January 2021. If you have any Brexit-related queries, please don’t hesitate to get in touch, whether by phone on 028 71 876 220 or by email firstname.lastname@example.org.
Even before Brexit came along, cross-border VAT issues were far from straightforward. Indeed, while the VAT system is an EU-wide construct, it offers plenty of opportunity for getting things wrong.
The rules are complex and often completely irrational, until you understand that the goal is for each Member State government to get its hands on the VAT in question. This desire has led to some very tricky rules and procedures.
However, with proper understanding of the rules, and care and attention to the guidance and procedures, it is possible to find a way through to a cost-effective outcome.
The most valuable relief for suppliers and purchasers of goods across borders is the zero-rating which generally applies on business to business (B2B) sales.
Where the conditions are met, this gives a handy cash-flow saving which can mean the difference between a successfully completed sale and the loss of a potential customer.
Most of the time, and for most businesses, things move smoothly. Every now and again, however, advice is needed, and we can assist in these situations, such as:
How to benefit from the simplification rules in triangulation arrangements, where goods are moved directly from one jurisdiction to another, but are sold to an intermediary in a third jurisdiction
How to avoid VAT registration where you own goods being used in another jurisdiction to provide services there – for example, the rental of coffee-grinding equipment to a cafe in another Member State
How best to deal with complex projects involving the installation of different kinds of goods together with the provision of different kinds of services, for example, the building of data warehouses, using suppliers from several different jurisdictions
What to do in situations where you can be caught unwittingly in cross-border VAT fraud as an entirely innocent party, who doesn’t benefit financially but can legally be stuck with the bill
How to handle “flash sales” of goods in one jurisdiction to an intermediary based in a third country for sale in another jurisdiction
The workings of the “call-off stock” provisions, where careful planning can offer you and your customer significant cash-flow benefits
How to deal with storage of your own goods in one jurisdiction for onward sale there, requiring registration for VAT in that country
As you can see, where you are doing something boring, like buying stock from the Republic of Ireland, and shipping it to your site in Northern Ireland, the rules are not an issue.
However, where you start getting involved in commercial arrangements which are entirely legitimate but perhaps a little bit unusual, the VAT system begins to creak and groan a bit. And that is where help is needed.
If you are involved in moving goods around and between the EU and the UK, give us a call to see how we can help you minimise administrative hassle and keep any VAT costs as low as possible.
The law defines a supply of services as “anything done for a consideration other than a supply of goods”. In other words, it’s about as broad as it could be.
In real life, of course, the distinction between goods and services isn’t always clear-cut. The real-life example of the construction of a data warehouse may be helpful here.
Some of the work being done amounted to the “installation or assembly of goods”, and was therefore a supply of goods. Other work being done was regarded as “construction”, and was therefore covered by the services rules. And some of the work seemed to be a bit of both!
We were able to assist the client in ensuring that they got all the VAT back they were entitled to, and that they – and their customer – didn’t end up paying any more VAT than they should have done.
Close attention to the rules combined with patient application to HMRC’s bureaucracy led to a good and clear outcome for the client. They knew what they had to do and they were able to do it, without losing out from a commercial perspective.
The services rules, like the rules for goods, are easy if you’re not doing anything unusual. If you, as a business, buy – say – accountancy services from the Republic of Ireland – then they will be zero-rated under the reverse charge.
However, if you are involved in property or construction, then the outcome can be quite different, and you may require registration in another jurisdiction.
If you are getting involved in buying or selling services across borders, give us a call to see how we can help you navigate the various rules and procedures, to get a good outcome for you.