1. International VAT Pitfalls and Developments Presented by:
Nancy Cruickshanks, Shipleys LLP &
Claire Taylor, Simply VAT

2. International VAT: Pitfalls and Developments
It’s VAT but not as we know it.
I relied on the freight agent.
The VAT man comes to call
What’s new

3. International VAT: Pitfalls and Developments
It’s VAT but not as we know it
“All my cross border transactions are with Overseas Businesses so they are VAT exempt – correct?”
No!
Consumers
Land
Events
Withholdings
Consumers – different rules depending on situation
General rule – based on supplier location
Long term hire of means of transport
Valuation of or work on goods
Land and similar place of performance services
Usual suspects
Hotel accommodation
Restaurants and catering
Events
B2B – admission
B2C – admission and other cultural, artistic and educational services
Withholdings
Non-EU – in lieu of reverse charge
Misuse of reverse charge within the EU

4. International VAT: Pitfalls and Developments
It’s VAT but not as we know it
“if I’m selling goods to overseas consumers I just worry about UK VAT – correct?”
NO!
Fulfilment centres e.g. Amazon (FBA)
Distance Selling thresholds
EUR 35,000 most EU countries;
EUR 100,000 DE, Lux, NL
UK - £70,0000

5. International VAT: Pitfalls and Developments
It’s VAT but not as we know it
B2C Digital Services – VAT MOSS
Since Jan 2015, VAT is accounted for where the customer is
Reporting via VAT MOSS in local Member State
E-Service Vs non E-Service

6. International VAT: Pitfalls and Developments
It’s VAT but not as we know it
Ignorance is bliss – but only while it lasts …
Different VAT Rates in different EU member states
Different VAT Registration rules e.g. Fiscal Reps for non-EU countries

7. International VAT: Pitfalls and Developments
I relied on the freight agent
“There’s VAT on the bill from the freight agent – I can claim that back can’t I?”
Maybe not!
UK Freight
Imports
UK EORI Number
Box 8 of C88
C79 – UK Import VAT Certificates
UK Freight
VAT element does not mean VAT is being charged – may be a disbursement
UK freight services – yes VAT is being charge
Imports
Very formalised system – strictly enforced by HMRC
Mistakes happen a lot
Clear advice difficult to get
EORI
Keys to the kingdom
Not automatic – need to apply
Make sure the freight agents use it
Import VAT certs
Check them
If in doubt – don’t claim

8. International VAT: Pitfalls and Developments
I relied on the freight agent
“The freight agent handled the export from the UK so I don’t need to account for VAT on the sale … or do I?”
Maybe!
Distance Sales
Time limits
Documents/Evidence of export
No removal from UK
Consumers
Distance selling – again
Time limits
Direct exports – removal from EU and obtain evidence within 3 months
Indirect exports – time limit is 6 months
HMRC do enforce these limits and will penalise for failures
Documents
HMRC National Export System – computer generated message confirming departure
Commercial transport evidence: authenticated sea/air waybills
Supplementary evidence: customer order; sales contract; correspondence; invoices; insurance documents
No removal
Seems obvious – if it doesn’t leave the UK you cannot zero rate even if billing an overseas customer

9. International VAT: Pitfalls and Developments
The VAT man comes to call
“The last time we had a VAT inspection we got a clean bill of health so everything is fine isn’t it?”
Maybe!
Inspection – not an audit
New laws
New activities
VAT inspections are rare – more likely to get a letter or a phone call
Correspondence can take months to resolve
Things get forgotten due to the time lag between items of correspondence
VAT officers often take a harder line when they are not facing you in a meeting
They only look at things from the UK perspective so will not be able to confirm whether your business has foreign VAT obligations
Quality of the advice is extremely variable
Legal changes
Some people are still not aware of the 2010 and 2011 PoS changes
HMRC do expect businesses to keep up to date with relevant VAT developments
If HMRC point you towards a reference source – make sure you read it and keep records
New activities
Make sure to check the VAT position of any new activities especially in the cross border context

10. International VAT: Pitfalls and Developments
Recent developments
Brexit
Business as usual
Hope for the best – plan for the worst
Greater reliance on freight agents
Import VAT cashflow
HMRC systems and staffing
Foreign VAT
Business as usual = message from Government and HMRC
Article 50 to be triggered by March – leaves just over 2 years to prepare – not much time if system changes are required.
May see the end of ECSLs and Intrastat but the replacements will be import and export declarations – so greater reliance on freight agents
May see the end of acquisition VAT but the replacement will be import VAT:
Consider getting a duty deferment account.
Make sure you have an EORI
Task someone with reconciling the two and checking the entries
HMRC systems and staff may not be geared up for the increased traffic – build in extra time.
May see the return of Customs’ inspections for intra-EU movements – build in extra time.
Foreign VAT may become even more difficult to reclaim.

11. International VAT: Pitfalls and Developments
Other developments
EU changes and Proposals
Cross border rulings
VAT Action Plan
UK Changes and Proposals
VAT Fraud Penalty
Anti-avoidance
Place of supply
Cross border rulings
Pilot programme – extended to September 2018
18 participating countries including UK, Italy, Ireland and the Netherlands
Notable absentees: Austria and Germany
As at July separate requests - details available from European Commission website
VAT Action Plan
One stop shop
Destination principal
Simplifications for SMEs
VAT Fraud Penalty
Legislation aimed at MTIC but could have wider impact (mission creep)
Anti-avoidance
Online market places
Place of Supply
Insurance repair services – use and enjoyment

12. Contact Details
Nancy Cruickshanks Shipleys LLP E: T: +44 (0)
Claire Taylor Simply VAT E: T: +44 (0)

13. Thank You