The VAT Package
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Published 25th January 2010
EC Sales Lists for Services
The UK will implement the following changes to EC Sales Lists from 1.1.10:
ESLs relating to services may be submitted quarterly, on a calendar quarter
basis showing indicator 3 to signify a supply of services.
From 1 January 2010, ESLs relating to goods may also be submitted on calendar
quarters, provided that the VAT-exclusive value of supplies of goods to other
Member States has not exceeded £70,000 in any of the previous 4 quarters. This
changes to £35,000 per quarter from 1 January 2012 onwards.
If a business exceeds the quarterly goods threshold by the end of the 1st or
2nd month in a quarter, an ESL must be submitted at the end of that month,
covering the month or months in that quarter.
Once a business is on a monthly cycle, because it has exceeded the threshold
in any quarter, it must continue to submit monthly ESLs for goods until the
value of its intra-Community trade in goods has been below the threshold for 5
consecutive quarters – it may then revert to quarterly submission if its trade
remains below the threshold.
A business required to submit monthly ESLs relating to goods, may still
submit ESLs relating to services quarterly.
The other change to ESLs is that the time for submitting returns has been
changed to 14 days from the end of the month for paper returns extended to 21
days for electronic submission of ESLs.
Changes to the place of supply rules for services
From 1 January 2010, the new basic rule (the ‘general rule’) for the place of
supply of services for B2B supplies (referred to as a ‘relevant business person
in the legislation) will be the place where the customer is established and no
longer be the place where the supplier is established, as is currently the case.
For B2C supplies of services, the general rule for the place of supply will
continue to be where the supplier is established. However, from 1 January 2015,
the place of supply of intra-EU B2C supplies of telecoms, electronically
supplied services and broadcasting will be where the customer is established or
usually resides. As now, there will be exceptions to the general rule for
certain services, with a view to achieving taxation in the place of consumption.
In the main these will be implemented on 1 January 2010, with further changes to
the ‘where performed’ rule from 1 January 2011 and for long-term hire of means
of transport from 1 January 2013.
In the majority of cases, business customers will account for VAT using the
reverse charge procedure (and recover tax subject to the normal rules) as is
currently the case.
Changes to the 8th Directive
system for cross border refunds
A new electronic cross-border refund system will go live across the EU from 1
January 2010.
The cross-border refund system enables a business that incurs VAT in another
Member State to recover it directly from that Member State (the Member State of
Refund - MSR). The current system, known as the 8th
Directive refund
system, is a lengthy, burdensome, paper-based system.
Under the new electronic system:
• The claim will be sent to the MSR, via the business’s own tax authority
thus eliminating the need for a VAT 66.
• The format of the claim is simplified, introducing the use of standard
fields for information and coding purposes. This user friendly approach will
reduce the number of issues due to language problems.
From 1 January 2010, claimants will have nine months (rather than the current
six months) in which to submit claims for VAT in the preceding calendar year.
The claim must normally be processed within four months and, if approved,
repaid within ten working days. If further information is required the
processing time can be extended to eight months. If these time limits are
exceeded interest will be paid.
The following de minimis limits will apply to claims:
• For periods of less than one year but not less than three months, it must
be for at least EUR 400.
• If the claim relates to a whole year or the remainder of a year, it must be
for at least EUR 50.
There will be a maximum of five claims that can be submitted to each MSR per
year - essentially one per quarter, plus a final ‘sweep-up’ claim to capture any
invoices not previously claimed during that year.
Details of these changes can be found at: http://www.hmrc.gov.uk/vat/cross-border-changes-2010.htm
VAT Flat Rate Scheme
As a result of the return of the VAT rate to 17.5% in January, the simplified
VAT flat rate scheme that can be used by businesses with a turnover of up to
£150,000 is being revised. The percentages applied by businesses using the
scheme will be increased to take account of the rate rise and various other
technical changes. The new rates will have effect on and after 1 January 2010.
Andrew Needham is a Director of VAT Specialists Limited,
headed by Chartered Tax Adviser Andrew Needham who has a degree in Law from UCNW
Bangor and is a specialist in indirect taxes. Andrew has over 20 years
experience in VAT having spent 7 years in HM Customs & Excise, firstly as a VAT
inspector, then as a departmental trainer, and finally in a headquarters policy
unit dealing with the introduction of the EU single market.
VAT Specialists Limited, 31 Bisham Park, Runcorn, Cheshire WA7 1XH.
(E) Andrew Needham BA CTA
(T) 01928 571207
(F) 01928 571202
(M) 07810 433 926
(W) www.vatspecialists.net
