VAT implications on supply of services from within the UK and other administrative changes post-Brexit
Supplies of services
How will Brexit affect the VAT treatment of business to business services?
The place of supply rules will broadly remain the same for supplies between businesses in different countries. This is because the current place of supply rules apply regardless of whether the business customer is in the EU or outside of the EU. Therefore, supplies from within the UK to businesses in the EU and third countries post-Brexit will remain outside the scope of UK VAT (subject to the normal exceptions e.g. land related services, admission and certain performance related services).
EC Sales Lists will no longer need to be completed for supplies of services to businesses in the EU. The final EC Sales List will be for sales made in the period to 31 December 2020 and should be submitted by 21 January 2021.
Services purchased from outside the UK will continue to be subject to the reverse charge procedure.
How will Brexit affect the VAT treatment of business to consumer services?
The supply of digital services to consumers in the EU is subject to VAT where the consumer is located. There is a simplified return called ‘mini one stop shop’ or ‘MOSS’ to allow businesses to pay EU VAT to HMRC for them to distribute to the various EU tax authorities. Post-Brexit, UK businesses will no longer be able to use UK’s MOSS service and instead UK businesses selling digital services to EU consumers will need to register for MOSS in an EU member state or register for VAT in each member state where the business has customers. There will be additional changes in the EU in July 2021 that will impact services to consumers. More about this can be read here.
When does my business need to register for MOSS for the EU post-Brexit?
Businesses must register by 10th of the month following their first EU sale. The €10,000 threshold introduced in 2019 will no longer apply. Mitchell Charlesworth are able to register businesses for MOSS and submit MOSS returns in the EU so please contact us if you need assistance.
When is the final return for the UK VAT MOSS system due post-Brexit?
The final return period for the UK’s VAT MOSS system will be the period ending 31 December 2020 and be submitted by 20 January 2021.
What happens to EU businesses supplying digital services to UK consumers?
Non-UK businesses selling digital services to UK consumers will be required to register in the UK and charge UK VAT to consumers as these sales can no longer be recorded on the EU MOSS returns.
Changes to IT systems
Will there be any changes to the EU VAT refund system?
UK businesses will no longer be able to claim refunds of VAT from EU member states using the existing EU refund scheme. VAT refunds will be eligible but using the existing processes for non-EU businesses.
The existing EU refund scheme can be used for refunds of VAT incurred before 1 January 2021 and businesses have until 11pm on 31 March 2021 to submit their claims.
VAT number identification - VIES
UK VAT numbers will no longer be able to be checked on the EU site. However, there will be a UK VAT number checker available.
If you need any assistance preparing your business for the January 2021 changes, please contact our VAT partner Alison Birch, or request your Brexit Readiness Review here.
Written 14 September 2020.