Cross Border Supplies of ServicesEC Sales List
Electronic Union Refund System
“The VAT Package”
The VAT package is a number of measures affecting VAT that were introduced on 1 January 2010.
- Changes to the place of supply rules for services supplied or received
- New VAT reporting obligations for cross-border services
- New process for recovering VAT from other Member States
- Further changes in 2011, 2013 and 2015 for certain services.
These changes affect anyone who makes or receives a supply of services from or to the UK, or wishes to claim VAT from another Member State.
The changes were introduced to ensure VAT on services is normally accounted for in the country where the supply is consumed. The result should be a reduction in cross-border VAT being charged on business-to-business (B2B) services, more accounting for VAT in the country of consumption under the reverse charge procedure, and less need to claim VAT incurred in other Member States.
The first action to take is to identify what services you supply to, or receive from, non-UK third parties, including any inter-company charges. Once identified, the impact of the VAT package changes can be assessed. Potential changes include one or more of the following:
- You may no longer need to charge UK VAT on services you provide where the goods worked on belong to someone outside the UK
- You may no longer be charged VAT in another Member State on services provided to you, but you may need to account for a reverse charge on your UK VAT return instead
- You may be required to complete an EC sales list detailing the services you supply to non-UK recipients
- If you still need to claim VAT incurred in other Member States, you will need to be aware of the new online filing rules and time limits.
EC Sales List
In the past, EC Sales Lists (ESLs) have only been required where a business dispatches goods to businesses in other Member States. From 1 January 2010, both goods and services supplied cross border need to be documented. Returns need to be completed quarterly unless the value exceeds £70,000 per quarter, in which case monthly returns are required.
There is no threshold for ESLs. As soon as you dispatch goods to the EU, or provide a service that is subject to the reverse charge in your customer’s Member State, you are required to submit a quarterly return.Deadline for Submission
You are allowed up to 14 days following the end of the reporting period to send HMRC a paper ESL, and 21 days if you submit online.
Information to be reported includes the following:
• Customer’s country VAT code i.e. GB – United Kingdom
• Customer’s VAT registration number. To check the number is valid use this link
• Total value of supplies in Sterling
• An indicator code being, code 1 for goods, code 2 for triangular supplies and 3 for servicesVAT Return
The value of services supplied or acquired should not be included in boxes 8 or 9 of your VAT Return. These boxes should only be used to record intra-EC supplies / acquisitions of goods and related costs.
Electronic Union Refund System
A new system was introduced on 1 January 2010 for businesses wishing to claim VAT from another Member State. The new electronic cross-border refund system applies to all claims submitted on or after 1 January 2010.
Claims can now be made for any Member State via the HMRC online system. If you are not already registered for online services, you will need to do so now. You can use an agent to make the claim on your behalf if you wish.
A separate online application is required for each Member State you wish to claim from. The claim period must not be more than one calendar year or less than three calendar months. The minimum amount that can be claimed is €400 (or equivalent national currency).
English is a common option to use in making a claim, but some Member States will require a claim to be made in their own language.
Applications must be submitted to HMRC no later than 30 September of the calendar year following the refund year.
New time limits have been imposed on Member States to deal with the claims. Interest may be payable if payment is made outside the deadline.
Legislation requires the UK to collect information on intra-EU trade in goods for statistical purposes. Businesses which trade with other Member States of the European Union and who exceed the exemption thresholds need to complete Intrastat returns giving statistical information about their supplies of goods.
Changes have been made to the exemption thresholds for businesses completing Instrastat returns. With effect from 1 January 2010, the thresholds are as follows:-
Arrivals £270,000 increased to £600,000
Dispatches £270,000 reduced to £250,000
The large increase in the arrivals exemption threshold may take many businesses out of this compliance burden.
If you think your business may be affected in any way, please contact our VAT Director Sharon Crush firstname.lastname@example.org
to discuss your circumstances and the way forward.