Top VAT Tips when trading overseas

By Ellen Benjamin – Personal Tax Assistant Manager.

VAT – a subject probably all business owners loathe.

Add the word “overseas” to the equation and it’s enough to have most people running for the hills!

But as much as we love to hate it, VAT is an important thing to get right for any business, so here are a few top tips to consider:

Top tip 1: Potentially more paperwork…

If you trade in the EU you will need to make sure you are aware of EC Sales Lists (goods and services) and Intrastat Declarations (goods only).

You should keep an eye on the thresholds to make sure these are completed when required by HMRC.

If you do not trade in the EU, these forms don’t need to be completed…so you’re off the hook!

Top tip 2: Registration overseas?

If you sell UK based goods to a non-VAT registered customer in the EU, UK VAT should normally be charged on the sale. Simple right?

Not necessarily…

This is called distance selling and if you exceed the sales threshold in any of the member states you may need to register in that country.

The thresholds are either €35,000 or €100,000 and can be checked here.

Top tip 3: The myth of Boxes 8 and 9…

You’d be forgiven for paying little attention to these two boxes at the end of your VAT return.

Actually, they are an important reporting box for a business selling or purchasing goods in the EU and if completed HMRC will automatically send you EC Sales Lists to complete (and Instrastat Declarations if the threshold is exceeded).

WATCH OUT! An important point to remember is that these boxes should never be populated if you only provide services as they are reserved solely for goods!

Top tip 4: Invoicing in another currency…

Ok, this one isn’t reserved just for overseas transactions but is a useful one to know.

Have you ever been asked by a customer if you can invoice them in a currency other than Sterling?

According to HMRC, a valid VAT invoice must contain a Sterling breakdown of the VAT element of the invoice if the supply is made in the UK.

This could actually be important if you need to change your invoice templates to accommodate this extra administrative requirement.

Top tip 5: Claim back your foreign VAT

Does your business incur foreign VAT whilst on business abroad?

It is possible to get a refund of this VAT in some circumstances (outside of your UK VAT return).

Whilst not recommended for small expenditure this should be considered where significant amounts are involved.

And finally…

Of course, the post-Brexit landscape for VAT is one of uncertainty and it is anticipated that significant changes may be on the horizon.

Therefore, whether or not you’re running for those hills…watch this space!

Want to know more?

Then get in touch with a member of our team to discuss further and find out how we can help your business. Call us on 0800 077 6410.

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