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Brexit and Northern Ireland

VAT and the NI Protocol

For VAT purposes, Northern Ireland will be treated as the EU from Great Britain’s perspective. The movement of goods between Northern Ireland and Great Britain will be treated as exports/imports while movement of goods between Northern Ireland and the Republic of Ireland will move freely as it will remain in the Single Market. However, Northern Ireland is, and will remain, part of the UK's VAT system.

UK VAT rules related to transactions in services will apply across the whole of the UK. HMRC will continue to be responsible for the operation of VAT and collection of revenues in Northern Ireland.

Under the obligations in the Protocol, import VAT will be due on goods that enter Northern Ireland from Great Britain. The same will also broadly apply to goods entering Great Britain from Northern Ireland.

There will be no requirement for a new VAT registration for sales of goods in Northern Ireland. If you are already VAT registered, your existing VAT registration will be unaffected, and you will not need to get another VAT registration. You will continue to account for VAT on all sales across the UK through your single UK VAT return, which will contain the same boxes as now.

Supplies of goods from NI to EU (including Ireland) and from EU (including Ireland) to NI:

  • The VAT treatment will remain unchanged from the current treatment as zero-rated intra-EU dispatches and acquisitions – this represents a great opportunity for NI businesses to have access the EU market in a way which GB businesses (in the absence of a deal) will not be able to. 
  • The EU will grant NI businesses an EU VAT identification number - a 'XI' country prefix on their UK VAT number - to enable them to report goods transactions after 31 December 2020. To get an EORI number that starts with XI, you must already have an EORI number that starts with GB. If you do not have one, apply for an EORI number that starts with GB as soon as possible.  If you already have an EORI number that starts with GB and HMRC thinks you need one that starts with XI, they’ll automatically send you one in mid-December 2020.
  • To get advice on moving goods between Great Britain and Northern Ireland sign up for the Trader Support Service. If you sign up your business before 23 November, this will also ensure you’ll be sent an EORI starting with XI.
  • NI businesses will still have to fulfil EU reporting requirements for goods (e.g. EC Sales Lists / Intrastat Returns) and will also still be subject to B2C Distance Selling registration rules (until 1 July 2021 when new a new single VAT Return will take effect (OSS, One-Stop-Shop). 
  • NI businesses will still be able to avail of the simplified procedure for triangulation (where an NI business is an intermediate supplier, but the goods are shipped directly between two other EU countries) to avoid the need to register for VAT in other EU member states. 
  • NI businesses will also still be able to reclaim EU VAT incurred via the electronic cross-border refund system.

Supplies of goods from NI to GB and from GB to NI:

VAT will continue to be accounted as it is currently on goods sold between Great Britain and Northern Ireland. This means that the seller of the goods will continue to charge its customers VAT and should show this on its invoices. The VAT charged will be accounted for as output VAT on the VAT return in the same box as it is now.

Where the customer receives an invoice from the seller showing that VAT has been charged, it may use this as evidence in order to reclaim the VAT as input VAT, subject to the normal rules.

However, there are a small number of exceptions to this where goods are:

•    declared into a special customs procedure when they enter Northern Ireland or Great Britain
•    currently subject to domestic reverse charge rules
•    subject to an Onward Supply procedure

Where the movement of goods falls within one of these exceptions, the customer or importer will account for the VAT on their UK VAT return.

We are here to help 

Our VAT experts are on hand to provide support and advice regarding import and export changes and will share further details, as they are released. We also have a dedicated Brexit section which includes information on the key changes and how these could affect you and your business.