Northern Ireland seen as part of the UK for VAT. But Not.

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There have been some interesting developments regarding Brexit’s VAT implications of late. One of those is the UK and EU’s different views on how Northern Ireland should be treated for VAT.

This week, HMRC published its policy and guidance on how businesses should account for VAT on goods traded between Northern Ireland and Great Britain. However, the guidance contradicts the EU commission’s view of Northern Ireland released in its notice to stakeholders in April 2020.

How the EU views Northern Ireland post the transition period

Put simply, the EU commission sees Northern Ireland as part of the EU for VAT purposes. That’s because it shares an open land border with the Republic of Ireland. Therefore, this means that goods moving between Great Britain and Northern Ireland should be seen as imports and exports for VAT purposes.

How HMRC views Northern Ireland Post the transition period

Most expected the HMRC’s view to be the same as the EU’s regarding Northern Ireland. However, HMRC’s policy document clearly contradicts it the EU’s view. HMRC’s policy states that companies must continue to account for VAT under existing domestic VAT rules (with very few exceptions). Their view is that any trade between Northern Ireland and Great Britain is domestic UK supplies for VAT purposes. To illustrate this means that a GB business selling goods to Northern Ireland may continue to charge UK VAT and account for it on its output VAT declaration. Ultimately, this means the GB business will not require a VAT registration in Ireland.

Furthermore, HMRC’s policy states that the recipient of the goods in Northern Ireland can continue to claim UK VAT through its local input VAT return.

The Rules will not apply if: 

  • Goods are traded and are declared to a special customs procedure
  • Where goods are subject to a domestic reverse charge
  • Subject to an Onward Supply procedure.

Businesses moving their own goods between Great Britain and Northern Ireland

Special VAT rules will apply when a business (or member of the same UK VAT Group) moves its own goods between GB and NI and vice versa.  These businesses must account for output VAT on the value of the goods. However, businesses can claim the VAT if the goods are used for taxable purposes. Similarly, For companies within the same VAT Group, and where the goods are physically located in NI at the time they are supplied, the transactions can only be ignored if both entities are established in NI. Businesses within this category should pay special attention to HMRC’s new rules and make sure they are operating compliantly.


It is unclear at this point whether the EU commission will challenge HMRC’s policy.  And whether they will try to bring it in line with their notice to stakeholders from April 2020.

Disclaimer: Reproduced/Adapted with permission from VATGlobal.

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