Guidance

Using a VAT margin scheme if you buy and sell goods between Northern Ireland and the EU

If you buy and sell goods between Northern Ireland and the EU, find out how to use a margin scheme to account for VAT. (VAT Notice 718)

From:
HM Revenue & Customs
Published
23 December 2021

There are different rules if you buy and sell goods between Northern Ireland and the EU.

Buying goods from the EU to sell in Northern Ireland

Buying goods from an EU private individual

There will be no VAT due on these goods when they’re brought into Northern Ireland from the EU. You can use a margin scheme for the onward sale of these goods, provided you can meet all the conditions of the scheme.

Buying goods from an EU VAT registered business

Margin scheme invoices must include one of the following indications:

  • a reference to Articles 313, 326 or 333 of the EC VAT Directive 2006/112/EC
  • a reference to the corresponding part of the relevant national VAT legislation
  • another declaration to indicate that the goods have been sold under a margin scheme

If your invoice shows margin scheme indications

If you receive an invoice for a supply from an EU member state which shows one of the margin scheme indications, you can enter the details into your scheme records if you’re sure that the supply has been made under a margin scheme.

If your invoice only shows a VAT number

If your invoice shows your VAT number, but does not show one of the margin scheme indications, then it’s likely that the goods have not been supplied under a margin scheme.

In both instances, you should check with your supplier before entering the details into your records if you are in any doubt about whether the supply was made under a margin scheme.

Selling goods from Northern Ireland to an EU member state

Sales made under a margin scheme from Northern Ireland to an EU member state are treated in exactly the same way as margin scheme sales within Northern Ireland.

This means that VAT is due on the margin in the UK and you must issue a normal margin scheme sales invoice.

You can use a margin scheme if you buy the following goods from Great Britain to sell in Northern Ireland or the EU:

  • cars
  • works of art, collector’s items and antiques

You cannot use a margin scheme for any other goods you purchase from Great Britain to sell in Northern Ireland or the EU.

Selling goods to an EU registered business

If you’re selling goods under the scheme, there is no requirement to obtain that business’ VAT registration number.

If you prefer, you can, in agreement with that dealer, treat the sale outside the margin scheme. If you do that, you can zero rate the sale under the normal EU supply rules. You must also:

  • show it as a dispatch in box 8 of your VAT return
  • complete an EC Sales List

You’ll have to obtain the dealer’s VAT registration number and show it on your invoice. For detailed information about the rules, see VAT on movements of goods between Northern Ireland and the EU (VAT Notice 725).

If you ship goods via Great Britain

You can still use the margin scheme if goods are shipped via Great Britain (England, Wales or Scotland).

Transfer of your own goods

The transfer of goods within the same legal entity between Northern Ireland and an EU member state is deemed to be a supply of goods for VAT purposes.

If you transfer your own goods to an EU member state using one of the margin schemes, and you supply the goods to yourself at the price for which you obtained them, then you will not have to account for:

  • any VAT on the transfer in the UK
  • acquisition VAT in the member state

If you sell the goods on after you transferred them, that sale will be subject to the VAT rules of the member state in which you make the sale.

Buying and selling a new means of transport

Any new means of transport that you purchase from, or sell to, an EU member state will not be eligible for a margin scheme. New means of transport are always liable to VAT in the country of destination.

Find more information about how to account for VAT on a new means of transport (VAT Notice 728).

EC Sales Lists and Intrastat

You do not have to complete EC Sales Lists and Intrastat for margin scheme supplies.

VAT-registered businesses in the UK that make supplies of goods from Northern Ireland to VAT-registered businesses in EU member states are required to complete lists (form VAT101) of their EC supplies.

However, you should not include any margin schemes transactions on an EC Sales List because they’ll be subject to VAT in the UK and therefore not eligible for zero rating.

Intrastat is the system for collecting statistics on the trade in goods between EU member states. As margin scheme goods are subject to VAT in the country of origin, you do not need to:

  • include Margin Scheme purchases or sales in your VAT Return
  • complete a supplementary declaration

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Published 23 December 2021
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