Businesses which import or export goods will be aware of the difficulties that leaving the EU with no withdrawal agreement in place will cause them. However, other businesses will also be affected by immediate changes to the VAT system.
EU VAT Refunds
If you paid VAT on business expenses in another EU country during 2018 you would normally have until 30 September 2019 to reclaim that VAT. HMRC is urging all UK businesses to submit refund claims for EU VAT before 29 March 2019 as after that date any refund claims from UK businesses will have to be submitted directly to the tax authority of the country where the expense was incurred, rather than to HMRC.
From 1 January 2019 businesses with annual sales below £8,188 (€10,000) of digital services to non-business customers in other EU countries no longer have to report those sales and pay VAT under the VAT MOSS rules. However, this de minimis turnover threshold does not apply to non-EU businesses, which will be the position of UK businesses after 29 March 2019.
If your business continues to make sales of digital services to non-business customers in EU countries after 29 March 2019, you will have to reregister for VAT MOSS as a non-EU business in an EU country (ie not the UK) by 10 April 2019. This also applies if you did not deregister from VAT MOSS in January as your VAT MOSS registration will automatically be cancelled from 1 April 2019.
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This note was published from our Spring 2019 Tax Briefing dated March 2019
Please be aware that the information above may have changed in subsequent months.
This note is written for the general interest of our clients and is not a substitute for consulting the relevant legislation or for taking professional advice.