Guidance

VAT IT system changes for businesses outside the UK if the UK leaves the EU with no deal

How your business will pay VAT on digital services, reclaim VAT, and check UK VAT numbers if the UK leaves the EU with no deal.

How to pay VAT on sales of digital services to UK consumers

Businesses outside the UK will no longer be able to use the VAT Mini One Stop Shop (MOSS) to report and pay VAT on sales of digital services to consumers in the UK.

You must register for VAT in the UK as soon as you supply any digital services to a UK consumer. The current €10,000 threshold for cross-border sales of digital services inside the EU will no longer apply.

You’ll need to follow HMRC’s VAT correction process to correct a UK VAT figure submitted in a previous MOSS return. You have up to 4 years from the end of the period relating to that return to do this.

How to claim UK VAT refunds

Claims for VAT incurred on business expenses before the UK’s exit from the EU

Businesses in the EU will no longer be able to use the EU VAT refund electronic system to claim refunds of VAT incurred in the UK.

Before the UK leaves the EU, claims can be made using the electronic system, but you should allow enough time for your member state to send the claim to the UK. If a claim is sent through the online system after the UK has left the EU, it will not reach the UK.

After the UK leaves the EU, EU businesses must use a manual process to reclaim UK VAT. Information on how to do this will be available after the UK leaves the EU in VAT Notice 723A.

The deadline for EU businesses to submit a VAT refund claim for expenses incurred prior to the UK leaving the EU will remain:

  • 30 September 2019 for claims for VAT incurred on expenses in 2018
  • 30 September 2020 for claims for VAT incurred on expenses in 2019 up to the date of the UK’s exit from the EU

Claims for VAT incurred on business expenses after the UK’s exit from the EU

If your claim relates to VAT incurred on expenses in the UK after the UK’s exit from the EU, you need to follow processes for businesses outside the UK.

The main differences between the electronic VAT refund process you will be used to and the VAT refund process for businesses outside the UK are that:

  • the repayment period runs from 1 July to 30 June instead of 1 January to 31 December
  • the deadline for submitting a claim is the following 31 December (6 months from the end of the claim period) - for example, if the UK leaves the EU on 31 October 2019 any expense incurred between 1 November 2019 and 30 June 2020 will fall within the repayment period ending 30 June 2020 and the deadline for sending your claim will be 31 December 2020
  • the claim must be made in English using form VAT65A
  • you’ll need to supply a certificate confirming your taxable status
  • you may need to supply all original invoices and receipts to support your claim

How to check UK VAT numbers

Businesses will not be able to use the EU’s VAT number validation service to check the validity of a UK VAT number.

After the UK leaves the EU, you can check the validity of UK VAT numbers using the UK’s VAT checking service.

Published 18 March 2019