Changes to accounting for VAT when trading with the EU after Brexit

The transition period that followed the UK leaving the EU comes to an end on 31 December 2020.

From 1 January 2021 countries in the EU will be treated the same way as the rest of the world when it comes to accounting for VAT on imports and exports.

Importing from the EU

From 1 January 2021 if your business is registered for VAT in the UK, you’ll be able to account for import VAT on your VAT Return for goods you import into:

• Great Britain (England, Scotland and Wales) from anywhere outside the UK
• Northern Ireland from outside the UK and EU

This is what HMRC are calling 'Postponed VAT accounting' because you do not have to pay import VAT upfront when the goods are imported into the UK.

There will be no changes to the treatment of VAT or how you account for it for the movement of goods between Northern Ireland and the EU due to Northern Ireland continuing to enforce the EU's customs code at its ports. 

HMRC guidance explains more on When and how you can account for import VAT on your VAT return.

Exporting to the EU

From 1 January 2021 you can charge customers VAT at 0% (known as 'zero rate') on most goods you export to the EU.

HMRC guidance explains how to Prepare to export from Great Britain from January 2021.

EC Sales List (ESL)

For the export of goods or the supply of services made to EU businesses on or after 1 January 2021, you will not need to submit ESLs. You will have until 21 January 2021 to submit ESLs for sales made before 1 January 2021.

You’ll still need to submit ESLs if you sell goods from Northern Ireland to EU VAT-registered customers.

VAT Filer will continue to enable ESL filing.

HMRC guidance explains How to report your EU sales from 1 January 2021.