RSM Global

Reclaiming EU VAT

If you have a UK business that has incurred VAT in another EU country, the normal process for recovering this VAT is to make a claim through the online UK portal. The normal deadline for making these claims is 30 September.
Due to Brexit, this has been brought forward to 29 March. After this date, the claim process reverts to a manual system available to non-EU claimants.

PRACTICAL STEPS TO TAKE NOW    

  • Ensure all EU VAT amounts are fully identified and supporting evidence is held
  • Submit applications for VAT recovery through the HMRC UK portal for any mainland EU VAT
  • Submit applications for UK VAT incurred by EU operations

DISTANT SELLING

If you have a UK business that sells products from the UK to end consumers in the EU, then you are likely currently managing those sales under the distance selling rules that require you to charge VAT based on the VAT rate applicable in the destination EU country. Following Brexit this will no longer apply, and your product sales will be subject to import clearance regulations into the EU and will need to be factored into your pricing structure. A similar reverse implication arises for products originating in the EU and being shipped to UK customers.

PRACTICAL STEPS TO TAKE NOW    

  • Factor in import clearance regulations into your pricing structure
  • Consider modifying your online prices or terms of sale to ensure the cost is not an added burden to your business

An alternative is to require all your customers to individually pay import duty expenses as part of the transaction. This effectively names them as the consignee/importer on each product shipment.

VAT ACCOUNTING AND COMPLIANCE

A great many rules and procedures will change and will affect the way transactions between the UK and other EU countries are managed. This VAT logic is typically configured into accounting software, and with Brexit, these rules will need to be reconfigured. These changes will also affect the need to complete
EU reports such as instrastats and European Commission sales lists. Although not critical to have these changes in place by 29 March, it is the recommended approach. An alternative is to produce corrected records after 29 March 2019. The rule changes will affect:

  • Transaction logic
  • Invoicing templates
  • Intrastat filing requirements
  • EC Sales List filing requirements
  • UK VAT return data

PRACTICAL STEPS TO TAKE NOW    

  • Review ERP systems and VAT logic to determine change requirements
  • Review compliance processes to determine change requirements
  • Review billing templates to determine change requirements
     

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HOW RSM CAN HELP?

With a limited amount of time to determine the impact of Brexit and take action, RSM can help you rapidly determine, assess, prioritise and manage the potential impact of the UK’s decision to leave the EU.

To learn more contact: lea.pateman@rsm.global

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