PE68100 - Other Partial Exemption issues: movement of own goods: Background and legal basis

Following the end of the transition period on 31 December 2020, goods in Northern Ireland (NI) remain subject to EU VAT rules. Goods which are moved from Great Britain (GB) to NI will therefore be subject to import VAT.

A partially exempt VAT registered business will be liable to import VAT on the movement of its own goods from GB to NI. Where such goods are intended to be used for either exempt or both taxable and exempt supplies, the business would face input tax restriction on their purchase and again on their movement to NI, therefore incurring double taxation on the same goods.

Legislation has therefore been introduced to allow partially exempt businesses in this situation to reclassify the original supply/importation of the goods in GB as taxable, allowing them full recovery of input tax on this.

This guidance explains the conditions for reclaiming the restricted input tax on the original purchase of the goods and how to account for output VAT on the movement.

Legal Basis

Paragraph 31A of Schedule 9ZB VAT Act 1994 provides the legal basis for treating the original supply of goods to the partially exempt business in GB as a zero-rated supply, subject to certain conditions. These conditions are set out in the next section of this guidance.