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HMRC internal manual

VAT Single Market

HM Revenue & Customs
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Simplifications: triangulation: how the simplification arrangements work


The simplification arrangements are targeted at the intermediate supplier (that is the UK company in the example at VATSM5205) in some three party (triangular) supply chains. Where they apply, the intermediate supplier’s liability to account for VAT shifts to the final customer in the Member State in which the goods are delivered. This relieves the intermediate supplier of the obligation to register for VAT in the Member State concerned.

The arrangements are compulsory under Article 141 of the Principal VAT Directive (see VATSM5220) and so apply throughout the EC. They are implemented in UK law by section 14 of the VAT Act 1994 (see VATSM5225) and regulations 17 and 18 of the VAT Regulations 1995 (see VATSM5230).

To be eligible both the intermediate supplier and the customer must be registered for VAT within the EC. So simplification is not available to non-EC suppliers unless they already have a VAT registration within the EC. The simplification is also unavailable where the goods remain in one Member State or where two of the parties are already registered for VAT in either the Member State of dispatch or arrival (see VATSM5215).

UK intermediate supplier

Without the simplification a UK intermediate supplier would be registerable in either the Member State of dispatch or arrival. However, under the simplification arrangements, the UK business can use its UK VAT registration number to secure zero rating from the supplier in the Member State from which the goods are dispatched. Apart from that all the business is then required to do is

  • issue an invoice to the customer in accordance with regulation 17 of the VAT Regulations 1995 (see VATSM5230) that indicates adoption of the simplification arrangements as required by regulation 14(2)(h), and
  • include the supply on an EC sales list (see VATSM7600) quoting the VAT number of the customer in the Member State of destination of the goods and the figure ‘2’ in the indicator box.

Non-UK intermediate supplier

To use the arrangements in cases where a UK customer will account for VAT on arrival in the UK, the intermediate supplier is required to notify the Non Established Taxable Persons Unit (NETPU) at Aberdeen and provide

  • their name, address and EC VAT registration number used, or to be used, to obtain zero-rating of the initial supply of the goods
  • the name, address and VAT registration number of the UK customer, and
  • the date the goods were first delivered, or are intended to be delivered, to the customer under these arrangements.

Separate notifications are required for each customer and should reach NETPU no later than the date of issue of the first invoice (in accordance with the requirements described below) to the customer concerned. Additional notifications are not required in the event of further supplies to the same customer. A copy of the notification should also be sent to the customer in the UK telling them that the simplified arrangements are being used. The supplier should retain a copy of each notification.

The supplier is also required to issue the customer with an invoice in accordance with regulation 18 of the VAT Regulations 1995 (see VATSM5230) on which adoption of the simplification arrangements is indicated. (This will be one of the requirements under the invoicing rules in their own Member State to which regulation 18(2)(a) refers). The invoice must be issued within 15 days of the date on which the supply would otherwise have taken place under the normal UK tax point rules. These might include receipt of a payment, or delivery of the goods.

UK customer

A UK business whose supplier is using the simplified procedure for triangular supplies will receive a copy of the NETPU notification mentioned above under ‘non-UK intermediate suppliers’. VAT is therefore to be accounted for as an acquisition in the normal way. The time of acquisition is the date of issue of the invoice by the supplier.