In difficult times, it makes sense to look for new markets. If you are VAT-registered, new markets may come with new complications in the paperwork, and it’s worth making sure that you are up to speed on the rules.
If you sell goods to business customers elsewhere in the EU, you are usually allowed to zero-rate the sale – you charge no VAT, but you can still recover any input tax on related costs. But you need to be able to show that the customer was registered and the goods left the country. HMRC has suffered from a large number of fraudulent claims in relation to EU trade – typically, but not exclusively, in relation to mobile phones and computer chips – and they are understandably suspicious if the papers are not in order.
If you buy goods from businesses elsewhere in the EU, you have to give them your VAT number to obtain the purchase free of foreign VAT, and then you account for UK VAT in Box 2 of your VAT return.
International purchases and sales of services are subject to different rules again – the result may be similar to the above, but the procedure and the detailed requirements are different.
If you are selling goods or services to businesses in the EU, you will need to complete an EC Sales List every quarter (or monthly, if you sell £35,000 of goods a quarter) giving the customers’ VAT numbers and the value of sales. If you exceed higher limits for purchases or sales of goods, you’ll need to complete supplementary statistical declarations (intrastats).
Imports and exports are different again. Anyone putting their toes into a foreign market-place needs to be able to deal with a host of problems, and HMRC’s requirements are probably not the worst of them – but they’re not the least either.
There’s some general information on the HMRC website, but it’s important to consider exactly what your business needs to do to comply with these rules. We can help.