With the end of the Brexit transition agreement we have introduced a number of VAT related updates to help you manage the changes. Firstly we’ve consolidated several different VAT provisions for your invoices under a new section that you will find in the purchase and sales invoice editor.
Postponed VAT accounting
On the 1st January a new postponed VAT accounting system was introduced for those importing goods from the European Union. Rather than paying the VAT upfront at the point of import and reclaiming later, it is instead declared as a reverse charge on your next VAT return.
When the Postponed accounting option is invoked for a given purchase invoice, in addition to the NET and VAT amounts featuring in Boxes 7 and 4 (respectively) the VAT amount will also be entered into box 1, thus reversing the VAT reclaimed in box 4.
Reverse charge on services
For VAT on the purchase of business to business (B2B) services, the current place of supply rules will remain. The tax will generally be subject to the country where the customer is situated and will be treated as a reverse charge.
When the “Reverse charge on services” option is invoked, the corresponding reverse charge for the NET and VAT amounts will be applied to boxes 6 and 1 respectively.
In the case where you are supplying services to EC member states and where the place of supply rules permit, from 1st January you can apply the zero rate of VAT and no further VAT options need to be selected on your invoices.
Decommissioning of non-MTD VAT filing service
On the 8th April HMRC will decommission the old VAT filing gateway, this is the one that required you to input your tax account user ID and password. If you are still filing VAT returns on this platform we recommend that you update to the new MTD based filing service ahead of the deadline. Please allow 1-2 weeks for the MTD migration to fully complete.
Updated VAT return box labels
Also from 8th April the following changes will be applied to the VAT return box labels.
Box 2: VAT due in this period on acquisitions from other EC Member States
Box 8: Total value of all supplies of goods and related costs, excluding any VAT, to other EC Member States
Box 9: Total value of all acquisitions of goods and related costs, excluding any VAT, from other EC Member States
Box 2: VAT due in this period on intra-community acquisitions of goods made in Northern Ireland from EU Member States
Box 8: Total value of intra-community dispatches of goods and related costs (excluding VAT) from Northern Ireland to EU Member States
Box 9: Total value of intra-community acquisitions of goods and related costs (excluding VAT) made in Northern Ireland from EU Member States
Updated VAT return notes for box 2,8 and 9:
For goods moved under the Northern Ireland protocol only.
Show the VAT due (but not paid) on all goods and related services you acquired in this period from EU Member States.
Boxes 8 and 9
In box 6 show the value excluding VAT of your total outputs (supplies of goods and services). Include zero rated, exempt outputs and EU supplies from box 8. In box 7 show the value excluding VAT of all your inputs (purchases of goods and services). Include zero rated, exempt inputs and EU acquisitions from box 9.
EU trade under the Northern Ireland protocol only
Use these boxes if you have supplied goods to or acquired goods from a EU Member State under the Northern Ireland protocol. Include related costs such as freight and insurance where these form part of the invoice or contract price. The figures should exclude VAT. You can find details of EU Member States in Notice 60 and Notice 725 or on the Gov UK website at www.gov.uk/topic/business-tax/vat, and at www.uktradeinfo.com under Intrastat.