How does the Brexit deal affect VAT for Non Profit organisations?

On Friday 1 January 2021 a welcome but limited Brexit deal came into effect. As a result you would be forgiven in thinking there have been few changes and little for you to do in respect of VAT. However, our previous alert focussed on the immediate changes for all purchasers of goods or services you now need to ensure that you are aware of the following, which are particularly important for Non Profits.

Economic Operators Registration and Identification (EORI) number

An EORI number is assigned to importers and exporters. It is used in the process of customs entry declarations and clearance for both imports and exports. There are UK, Northern Ireland (NI)/EU EORI numbers.

From now onwards you will be required to hold the appropriate EORI number to import or export any goods into or from the UK (including to/from NI). Without these you may not be able to import or export such goods and at the very least it is likely to lead to increased costs and delays.

It will take a week for the application to be processed for a UK or NI EORI number via, Get an EORI number - GOV.UK, but it could save unnecessary delay even if just purchasing the odd miscellaneous item or two, such as office supplies from the EU.

Sales of goods to EU private (B2C) customers

For an interim period to the end of June 2021 there is no overseas VAT liability if such goods are sold leaving the customer responsible for any taxes. This of course creates a customer management issue.

From July 2021 you will then be required to start accounting for local VAT on such sales in the customer EU countries.

If your consignments at that point have a value under €150, you will be able to register once under an Importers One Stop Shop (IOSS). However, if over that value, you will need to register in each EU country you undertake such business over that value.

Reverse charges

The rules regarding reverse charges for services will not change and VAT will continue to be due on all taxable services where appropriate from all non-UK suppliers.

The procedures for receiving goods is changing. If you are VAT registered and importing goods valued at under £135, whether from the EU or elsewhere, you will not be charged import VAT. However, you will need to apply the reverse charge in the same way as for services.

EC sales list

Friday 1 January 2021 saw the end of EC sales lists for the UK, but not when moving goods or providing services to NI and vice versa.

Duties

Under the new deal, classifying all goods as ‘Tariff Free’ is somewhat of an exaggeration as only goods with a UK or EU origin are likely to be duty free.

Need further help?

For those not involved at all in the movement of goods the impact is limited. However, if you have a specific query, please do not hesitate to contact Robert Warne or your usual Crowe contact.