Updates

We have compiled the latest updates to various HMRC VAT publications, briefs, and guidance. Readers should note that there are also numerous updates to VAT guidance and rules due to the UK’s departure from the EU. Claim a VAT refund as an organisation not registered for VAT;   Late payment interest if you do not pay VAT or penalties on time;   Pay the VAT due on your One Stop Shop VAT Return;  People involved in transactions connected with VAT fraud;  Partial exemption (VAT Notice 706);  Health professionals and pharmaceutical products (VAT Notice 701/57);  Updates on VAT appeals;   Charity funded equipment for medical and veterinary uses (VAT Notice 701/6);  Insolvency (VAT Notice 700/56);  Apply to join the VAT Flat Rate Scheme;   Motoring expenses (VAT Notice 700/64);  VAT on goods exported from the UK (VAT Notice 703);  Register for VAT if you make relevant acquisitions into Northern Ireland;  VAT Government and Public Bodies;  Claim a VAT refund as an organisation not registered for VAT; and  Register for VAT by post. 

In this week’s EU exit corner, we bring you the latest guidance updates and publications relevant to EU exit. The most recent Trader Support Service and Cabinet Office Borders bulletins are also available. We also update you on the rules of origin for electric vehicles and batteries and the latest work of the House of Lords Windsor Framework Sub-Committee. HMRC has also sent an email reminder with useful preparation hints and tips for the first phase of its Border Target Operating Model which takes effect from 31 January 2024 for goods imported directly into Great Britain from Ireland.  UK and EU agreement on rules of origin for electric vehicles and batteries extended to  2026  The UK and EU have agreed to extend the Trade and Co-operation Agreement rules of origin for electric vehicles and batteries until 31 December 2026. This was confirmed by the release of a UK Press Notice and is confirmed in the Partnership Council decision.  House of Lords Windsor Framework Sub-Committee update  The House of Lords Windsor Framework Sub-Committee (formerly known as the House of Lords Protocol Sub-Committee) recently wrote to the Foreign Secretary asking for greater clarity on the regulatory divergence issues arising from the Windsor Framework, following consideration of evidence it received as part of the recent inquiry.  In November 2023, the Committee launched a short inquiry into regulatory divergence arising from EU and domestic legislation, in the context of the Windsor Framework and took evidence from academic, policy and legal experts, a range of business organisations, farming representatives and the government.  In its letter, the Committee draws attention to a number of key issues which were highlighted in the evidence it received, including:  The impact of regulatory divergence;  Potential opportunities of regulatory divergence;  Benefits of the Windsor Framework relating to regulatory divergence;   Potential risks relating to regulatory divergence; and  Mechanisms for managing regulatory divergence.  Miscellaneous updated guidance etc.   The following updated guidance, and publications relevant to EU exit are available:-  External temporary storage facilities codes for Data Element 5/23 of the Customs Declaration Service;  Bringing commercial goods into Great Britain in your baggage;  Notices made under the Customs (Import Duty) (EU Exit) Regulations 2018;  Restricted and controlled goods for merchandise in baggage;  Notices made under the Customs (Export) (EU Exit) Regulations 2019;  Declare commercial goods you’re bringing into Great Britain in your accompanied baggage or a small vehicle; and  Data Element 2/3 Documents and Other Reference Codes (National) of the Customs Declaration Service (CDS). 

In this week’s EU exit corner, we bring you the latest guidance updates and publications relevant to EU exit. The most recent Trader Support Service bulletin is also available. The Department for the Economy in Northern Ireland has asked us to publicise a request from HMRC for participants to take part in HMRC’s Import One Stop Shop trial and we highlight some new resources which aim to support exporters and cross-border trade.  Import One Stop Shop (“IOSS”) trial  The Department for the Economy has been in touch with a request from HMRC to identify businesses who may wish to use the forthcoming VAT Import One Stop Shop (“IOSS”) system. HMRC is looking to speak with businesses who might be interested in using this facility ahead of the go live period next year. This potentially might allow those business access to training and could help resolve any initial teething issues, ahead of official launch.   The IOSS scheme is a VAT simplification scheme which the EU introduced on 1 July 2021. The UK is committed to making this scheme available in Northern Ireland. Following the introduction of the Windsor Framework, the IOSS scheme will be open to Northern Ireland businesses to register from 2024 (date to be confirmed).   Broadly, the IOSS is a monthly VAT reporting and payment system that businesses can opt to use where they sell (non-excise) goods to consumers in Northern Ireland or the EU, where the business is located outside the EU and the UK. The goods must be imported in consignments not exceeding £135 (€150). Once registered for the scheme, businesses are required to charge and collect any VAT due at the point of sale from the consumer and account for the VAT through their monthly IOSS return by submitting a single VAT payment. If you have any clients or are a business who might be interested in participating in the IOSS trial, please get in touch.  Resources for cross-border trade  Several new resources are available to support those engaged in cross-border trade. Invest NI has recently published updated pages on exporting and Inter-Trade Ireland has launched a cross-border trade hub which contains a range of different resources and useful guidance.  Miscellaneous updated guidance etc.   The following updated guidance, and publications relevant to EU exit are available:-  Safety and security requirements on imports and exports;  Making an entry summary declaration;  Overview of the Single Trade Window;  Report a problem using the Customs Declaration Service;  The Customs (Aerodromes and Miscellaneous Amendments) Regulations 2023; and  External temporary storage facilities codes for Data Element 5/23 of the Customs Declaration Service. 

In this week’s EU exit bulletin, we bring you the latest guidance updates and publications relevant to EU exit. The most recent Trader Support Service bulletin is also available and HMRC has sent an email about the impact of industrial action on 15 March on goods movements. Miscellaneous updated guidance etc. The latest guidance updates, and publications relevant to EU exit are as follows:- Apply for a certificate confirming an employee pays UK National Insurance when working abroad (CA3822); Check simplified procedure value rates for fresh fruit and vegetables; High risk food and feed of non-animal origin (HRFNAO): official certificates; Apply for approval to be part of the Registered Consignee scheme in Northern Ireland; Apply for approval to be a tax representative in Northern Ireland; Apply for an Advance Origin Ruling; External temporary storage facilities codes for Data Element 5/23 of the Customs Declaration Service; Notices made and draft notices to be made under the Taxation (Cross-border Trade) Act 2018; Data Element 2/3 Documents and Other Reference Codes (National) of the Customs Declaration Service (CDS); Customs Declaration Service communication pack; External temporary storage facilities codes for Data Element 5/23 of the Customs Declaration Service; Authorised Consignee Temporary Storage (ACTS) location codes for Data Element 5/23 of the Customs Declaration Service; and Manually arrive your goods in the UK.    

Akriti Gupta, Advocacy and Voice writes: There are less than eight weeks to go to the 31 October Brexit deadline. According to recent reports, 70 per cent of smaller businesses believe that Brexit will adversely impact their business, affecting not only on trade, but business sentiment and investment as well. Ireland is a small open economy, heavily reliant on the UK market as its trade-testing ground. Small businesses that trade with the UK will be affected by supply chain disruption, currency risk, trade tariffs and the requirement to operate within dual regulatory frameworks; the principal risk is the disruption of any continued trade post-Brexit. Practitioners need to liaise with their clients on Brexit-related issues now if they have not already done so. With Brexit timelines still not established and future business models remaining unclear, smaller businesses and their professional advisers are strongly advised to consider the following five points:  1. Assess and develop customs capacity We are encouraging businesses across Ireland and the UK which are currently trading with each other to ensure that they can continue to do so post-Brexit. To do this, they must understand the rules that will apply for importing and exporting. While some businesses have experience of the customs formalities required to import and export outside of the EU, for many, particularly the smaller business, it will be their first exposure to them. All business should first apply for a customs registration, i.e. an Economic Operator Registration and Identification Number (EORI). It takes between three and five minutes online to acquire this (see below). Statistics from Revenue and HMRC suggest that thousands of small businesses on the island of Ireland have not applied for one; such business should be encouraged to acquire this without delay. Regardless of whether customs duties apply to goods moving between Ireland and the UK and the UK and the EU, customs declarations must be submitted to Revenue and HMRC respectively. Businesses should also use the time between now and 31 October to improve their knowledge of customs procedures, and close off any gaps in their customs knowledge that could prevent them from completing customs returns and declarations necessary to keep goods moving. Businesses will need to have customs expertise and relevant software to file these declarations, or should hire an agent to do this on their behalf. It is important to remember that tax authority officials will check that the proper declarations are in place; goods will be detained at ports and borders if they are not. There are various government supports to help do all of this. 2. Review your supply chain and market Tariff barriers and border control will cause delayed investment and barriers to trade for small businesses. Businesses must conduct a SWOT analysis of their existing supply chain and consider alternative suppliers and markets outside the UK. We would also recommend speaking to all customs agents and goods transport services as there will also be changes to transportation and logistics between Ireland, the UK and other EU countries. Post-Brexit, businesses that use the “landbridge” will face new rules when using the customs transit procedure, causing delays that will especially impact goods with a short shelf-life. Businesses should consider applying to Revenue/HMRC to avail of customs supports which may allow goods to be moved in an easier manner.  3. Review all your certification, regulation and licencing It is essential that businesses check that their products or services are fully compliant with all relevant regulation for sale on the UK or EU market post-Brexit. Businesses in highly regulated sectors such as medical device manufacturing, construction and transportation must be particularly sure that their registrations, certifications and licensing are still valid. Where appropriate, they will need to ensure that their UK supplier has appointed an EU-based authorised regulator, as EU registrations issued to UK companies prior to Brexit may no longer be valid.  4. Manage currency and cash flow Volatility in currency markets, particularly around the euro/sterling exchange rate, will present a key challenge for businesses post-Brexit. It is imperative for both importers and exporters to assess their currency exposure. Both importers and exporters should hedge their future transactions to give themselves certainty and a concrete base from which to price their goods and services. Businesses should also be availing of government supports to help manage cash flow and mould their business plans accordingly. One such government support is the Brexit loan schemes; however, only ten per cent of these loan schemes have reportedly been accessed. The Irish Government is now communicating via emails, letters and customs workshops to smaller businesses to encourage them to avail of this facility in order to help them prepare. In the UK, HMRC has stated that it will issue EORI numbers to most VAT-registered businesses, while also making available additional funding to support businesses with the costs of making customs declarations. Businesses based in, or with a branch in, the UK can apply for this funding ahead of the UK leaving the EU. 5. Protect and inform staff The responsibility to check potential visa requirements for staff, and the recognition of professional qualifications and licences required to practice, remains with the employer. Where relevant, businesses must account for these requirements and keep their staff informed of any developments. With a talent shortage in many areas, businesses must invest in learning and development for staff as a priority. In addition to taking the above steps, smaller businesses and their professional advisers are strongly encouraged to attend all possible government events and working groups, and ensure that they are maximising government-run Brexit preparation programmes and supports. Read all our updates in our Brexit web centre at https://www.charteredaccountants.ie/brexit and our page dedicated to no-deal Brexit planning at https://www.charteredaccountants.ie/knowledge-centre/brexit/no-deal-Brexit-planning.