Q: My client sells goods wholesale from his UK warehouse to EU VAT registered businesses – he has been preparing himself for Brexit, including obtaining an Economic Operator Registration and Identification number (EORI). Now that a deal has been agreed, with a transition period running to the end of December 2020, what does the client need to do differently from 1 February 2020?
A: As the UK has agreed to leave the EU with a deal, which includes a transition period until 31 December 2020, nothing will change in terms of VAT immediately. During the transition period, the UK will remain part of the single market and customs union meaning that we will continue to follow the rules regarding Intra-EU movement of goods set out in VAT Notice 725 – The single market and updated guidance on zero-rating published in December 2019 pending an update to the notice
This means that the client can continue to zero-rate their sale of goods, as long as they have their customers EU VAT number, the goods are sent or transported to another EU member state, and they keep valid commercial evidence that the goods have been removed from the UK within the relevant time limits (see VAT Notice 725, paragraph 4.4) The transition period also means that the client must continue to submit EC sales lists monthly or quarterly as appropriate.
As you mentioned, your client was advised to obtain an EORI number ahead of the EU exit, in case the UK left the EU with no deal. They should keep this reference as they are still likely to need this at the end of the transition period – equally if they have registered for Transitional Simplified Procedures (TSP) for imports, they should keep this paperwork ready for the end of the transition period.
NB. During the transition period, businesses will still be able to submit valid EU refund claims via HMRC, and those businesses that are registered for VAT MOSS because they supply B2C supplies of digital services to EU consumers, may continue to submit VAT MOSS returns for the time being in the UK, rather than needing to register in an alternative EU member state.