Commentary

RCB/20/11 Accounting for acquisition VAT on intra-EU supplies – changes to the “fallback” provisions

Part V16 Forms and other HMRC material

RCB/20/11 Accounting for acquisition VAT on intra-EU supplies – changes to the “fallback” provisions

RCB/20/11 Accounting for acquisition VAT on intra-EU supplies – changes to the “fallback” provisions

Revenue & Customs Brief, Issue 20. 16 May 2011

Introduction

This brief announces a change in VAT treatment where a business uses a UK VAT registration number (other than for triangulation purposes – see below) to secure zero-rating of goods sent from one EU member state to another, without arriving in the UK.

Under what is often referred to as the “fallback” provision, use of a UK VAT registration number in these circumstances makes the customer liable to account for acquisition VAT in the UK. Significantly this does not cancel any liability to account for acquisition VAT in the member state to which the goods are sent (“the member state of arrival”). However, the UK VAT can be adjusted if VAT is accounted for correctly in the member state of arrival.

The fallback rule is explained in paragraph 7.7 of Notice 725 “The Single Market” (Part V8). The change follows the judgement of the Court of Justice of the European Union (CJEU) in the joined cases of X (C-536/08) and Facet BV (C-539/08).

The CJEU decision

The issue before the CJEU arose from two similar cases. In each, supplies of computer goods were

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