UK VAT is charged on a supply of goods or services made (or treated as made) in the UK at a rate of, usually, 20% of the value of the supply. Although it is the person supplying the goods or services that is required to account to HMRC for the VAT, the cost of the VAT is usually passed on to the recipient of the supply. A VAT-registered recipient of a supply can therefore typically claim (or recover) the amount in respect of VAT that it has paid provided, broadly, that such supply is directly linked to its VATable business, ie it is a VAT cost incurred by the recipient in providing (or attributable to the making of) its own VATable supplies of goods or services. Normally, a supply of goods or services involves two parties—the supplier and the customer. However, it is also a common feature of commercial transactions for a party to pay an amount to a supplier in connection with a supply that is provided to a third party,

For EU Member States, Council Directive 2006/112/EC (the VAT Directive) lays down the infrastructure for a common VAT system, which each Member State is required to implement in its home territory by means of domestic legislation. This domestic legislation must not only implement the VAT Directive correctly, but must do so, and must be applied, in a manner that complies with a number of EU legal principles (also known as EU general principles). This was certainly the case in the UK while it was an EU Member State. What has happened since the UK left the EU is discussed in Practice Notes: Retained EU law and tax, Assimilated law and Assimilated law and tax. A summary of the key points is set out at the end of this Practice Note; suffice it to say for now that EU general principles have not (as some might have expected, or hoped) been consigned to the dustbin of (UK fiscal) history. This Practice Note is about EU legal principles that used regularly to arise in a VAT context.

ARCHIVED: Due to the reforms envisaged by The Windsor Framework, the details of which were announced by the UK government on 27 February 2023, this Practice Note has been archived and is not maintained. The information contained in this Practice Note is accurate as at 1 January 2021. For more information on The Windsor Framework and its implications for VAT in Northern Ireland, see: The Windsor Framework. This Practice Note is concerned with VAT as it applies to the purchase of goods by businesses VAT-registered in Northern Ireland (NI) from businesses in the EU from 1 January 2021 (and as it applied to all VAT-registered businesses in the UK on and before 31 December 2020). When a supply of goods begins in one Member State and the goods arrive in another Member State, there will have been an EU cross-border movement of goods. This is known as a dispatch by the supplier and an acquisition by the customer. The supply is not subject to VAT in the supplier’s Member State but is subject to

ARCHIVED: Due to the reforms envisaged by The Windsor Framework, the details of which were announced by the UK government on 27 February 2023, this Practice Note has been archived and is not maintained. The information contained in this Practice Note is accurate as at 1 January 2021. For more information on The Windsor Framework and its implications for VAT in Northern Ireland, see: The Windsor Framework. This Practice Note is concerned with VAT as it applies to the movement of goods between Northern Ireland (NI) and the EU from 1 January 2021 (and as it applied to all VAT-registered businesses in the UK on and before 31 December 2020). Distance selling occurs when a VAT registered EU supplier sells and delivers goods to a non-VAT registered customer in another EU country. The customer could be a private individual, or an organisation that is not required to register for VAT such as a charity or public body, or a business that is too small to register or only makes exempt supplies. It is important to note

ARCHIVED: Due to the reforms envisaged by The Windsor Framework, the details of which were announced by the UK government on 27 February 2023, this Practice Note has been archived and is not maintained. The information contained in this Practice Note is accurate as at 1 January 2021. For more information on The Windsor Framework and its implications for VAT in Northern Ireland, see: The Windsor Framework. The UK ceased to be an EU Member State on 31 January 2020. On that date, the UK entered an implementation period (IP), during which it continued to be treated as a Member State for many purposes, and remained bound by EU law. The IP ended at 11pm on 31 December 2020. On that date, a body of EU-derived rights and legislation, known as retained EU law, was converted into domestic UK law. For more on EU retained law and VAT, see Practice Note: Retained EU law and tax. The Taxation (Cross-border Trade) Act 2018 makes provision for the UK to cease being a Member State of the EU and

ARCHIVED: Due to the reforms envisaged by The Windsor Framework, the details of which were announced by the UK government on 27 February 2023, this Practice Note has been archived and is not maintained. The information contained in this Practice Note is accurate as at 1 January 2021. For more information on The Windsor Framework and its implications for VAT in Northern Ireland, see: The Windsor Framework. From 1 January 2021, the movement of goods between Northern Ireland (NI) and Great Britain (GB) will be treated as imports and exports for VAT purposes. This Practice Note sets out the legislative basis for this position, as well as the approach to accounting for VAT on such movements. It also details the VAT implications of the movement of a VAT-registered business’ own goods between GB and NI, intra-group movements and movements of goods involving the EU. Background The UK ceased to be an EU Member State on 31 January 2020. On that date, the UK entered an implementation period (IP), during which it continued to

ARCHIVED: Due to the reforms envisaged by The Windsor Framework, the details of which were announced by the UK government on 27 February 2023, this Practice Note has been archived and is not maintained. The information contained in this Practice Note is accurate as at 1 January 2021. For more information on The Windsor Framework and its implications for VAT in Northern Ireland, see: The Windsor Framework. This Practice Note is concerned with the VAT treatment of businesses that trade under a Northern Ireland (NI) VAT identifier and which sell goods (which are removed from NI) to businesses in countries in the EU from 1 January 2021 (being the same treatment as that which applied to all VAT-registered businesses in the UK on and before 31 December 2020). A sale of goods within the EU is often called an 'intra-EU dispatch' or a 'removal' and is treated differently from an export of goods to a destination outside the EU. The normal rule is that an intra-EU dispatch is zero-rated in the country of dispatch,

ARCHIVED: Due to the reforms envisaged by The Windsor Framework, the details of which were announced by the UK government on 27 February 2023, this Practice Note has been archived and is not maintained. The information contained in this Practice Note is accurate as at 1 January 2021. For more information on The Windsor Framework and its implications for VAT in Northern Ireland, see: The Windsor Framework. This Practice Note is concerned with VAT as it applies to the movement of goods between Northern Ireland (NI) and the EU from 1 January 2021 (and as it applied to all VAT-registered businesses in the UK on and before 31 December 2020). Triangulation is an EU-based VAT simplification measure that was introduced to reduce the requirement for EU businesses to register for VAT in other EU Member States. Triangulation refers to the situation in which there is a supply of goods along a chain of three parties, but the goods are physically delivered from the first party in the chain directly to the last. Each of the three parties

This Practice Note looks at the principles of the VAT capital goods scheme (CGS). Why does this matter? The CGS can create a substantial liability for property owners, particularly on a disposal. This can usually be avoided, but only if it is recognised and appropriate action is taken. This does not always happen, and negligence claims are not unusual. The CGS can also sometimes allow additional VAT to be claimed from HMRC, and for some businesses it imposes an ongoing compliance obligation. In a transfer of a going concern (TOGC), a buyer will often be acquiring potential liabilities, and it is strongly recommended that they obtain warranties about the CGS position (see Practice Notes: VAT—transfers of a going concern involving land and buildings and VAT TOGC clause—asset purchase agreement—buyer and seller wording). What is the CGS? In general, businesses can recover VAT where it relates to their taxable supplies, but not where it relates to exempt supplies or non-business activities. If it relates only partly to taxable supplies, they can recover a portion of the VAT (see

This Checklist was produced in partnership with Ronnie Brown of Burness Paull LLP. What is the capital goods scheme? The capital goods scheme (CGS) is a mechanism for adjusting over a specified period, being a period of ten years in the context of property, VAT incurred on capital expenditure at or above a specified threshold, such adjustments depending upon changes in taxable use over the relevant period. For a fuller explanation, see Practice Note: VAT—capital goods scheme (CGS). What is the relevant threshold? The threshold is:• for capital expenditure incurred on or after 29 July 2026, £600,000 or more (exclusive of VAT), or • for capital expenditure incurred on or before 28 July 2026, £250,000 or more (exclusive of VAT) noting that the new threshold only applies where no capital expenditure on the property has been incurred before 29 July 2026. Where expenditure is incurred before 29 July 2026 and the item is brought into the CGS under the relevant threshold applicable at that time, it will remain within the CGS even though,

The conditions for a transfer of a business to be treated as a transfer of a going concern (a TOGC) are set out in Practice Note: VAT—what is a transfer of a business as a going concern? Broadly if a transfer of a business is a TOGC it is treated as a ‘nothing’ for value added tax (VAT) purposes because a supply does not take place. However, even though this is the case, there are still a number of consequences which need to be borne in mind when providing advice in relation to a TOGC. This Practice Note deals with the consequences for the buyer (transferee) and seller (transferor) of a transfer of a business: • being correctly treated as a TOGC, and • being incorrectly treated (or not treated) as a TOGC This Practice Note includes references to EU case law. The UK ceased to be an EU Member State on 31 January 2020. On this date, the UK entered an implementation period (IP), during which it continued to be

For VAT purposes, from 1 January 2021, an export means a supply of goods from Great Britain (GB) to a destination outside of the UK, or from Northern Ireland (NI) to a non-EU country outside of the UK. There are two types of exports: direct and indirect. For VAT purposes, a direct export is where the goods are removed under the control of or on behalf of the supplier, whereas an indirect export is where the goods are removed under the control of or on behalf of someone other than the supplier, usually by the overseas customer. Note that the definitions of direct and indirect exports differ for customs purposes (where a direct export is where goods leave the EU without travelling via another Member State, whereas an indirect export is where the goods leave the EU via another Member State). This Practice Note is about exports for VAT purposes; it does not consider other issues associated with exporting goods, such as licences or customs. For commentary on customs issues, see: Custom duties: De