Information supplied by Mazars

The criteria that companies must follow in order to  zero-rate their supplies are:

• That the VAT number and two-letter country code prefix of the customer are printed on the company’s VAT sales invoice
• That the goods are sent to another EC member state, and that documentary evidence is obtained showing the goods have been removed from the UK.

If items are sold to companies unregistered for VAT, then VAT is normally charged in the country from which the item was dispatched.

 

1. EC Sales List

All VAT registered business in the UK that supply goods (and, from 1 January 2010, certain services) to VAT-registered businesses in other European Union (EU) countries, are required to inform HMRC about the supplies.

VAT registered businesses will need to complete an EC Sales List (ESL) showing details of each customer in the EU and the value (in sterling) of the supplies made to them in the period. If no supplies have been made, there will be no need to complete or submit  an ESL.

The ESL will require details of:

• The customer
• The relevant country code
• The value of the goods and/or services supplied

Annual ESLs

If businesses make annual VAT Returns they can contact HMRC to apply for approval to submit ESL’s once a year provided the business meets all of the following conditions:

• Their total annual taxable turnover does not exceed £145,000
• The annual value of their supplies to other EU countries is not more than £11,000
• Their sales don't include New Means of Transport

Completing a simplified ESL?

If businesses only make low levels of supply of goods to VAT-registered customers in another EU countries, businesses may not need to fill in the full ESL. Instead, businesses can contact HMRC and ask for permission to submit a simplified annual ESL, provided all of the following conditions are met:

• The value of a businesses total taxable turnover in a year isn't more than the VAT registration threshold plus £25,500. This amount is currently £93,500.
• A businesses supplies to customers in other EU countries are not more than £11,000 a year.
• A businesses  sales do not include New Means of Transport.

Deadlines for submitting your ESL

From 1 January 2010 businesses must submit ESLs to HMRC:

• For online submissions - within 21 days from the end of the reporting period
• For paper ESLs - within 14 days from the end of the reporting period

If businesses submit their ESL’s late, they may incur a penalty.

New ESLs for services and changes to ESLs for goods

With effect from 1 January 2010, as part of the new EU VAT Package intriduced,  UK VAT-registered businesses that supply services to other businesses in the EU where the place of supply of these services is the customer's country, will be required to complete a Reverse Charge ESL for each calendar quarter and submit these within 14 days for paper returns and 21 days for electronic returns.

How often do businesses need to submit their ESL’s?
Business is supplying:	Customer is:	The value of supplies to those customers:	EC Sales Lists need to be submitted every:
Goods	a VAT-registered business in another EU country	is over the threshold of £70,000 in the current or four previous quarters	month
Goods	a VAT-registered business in another EU country	is under the threshold of £70,000 in the current or four previous quarters	quarter
Services that are subject to the reverse charge in the customer’s country	a VAT registered business in another EU country	N/A	quarter (but businesses can choose to submit them every month)
Goods and services and businesses are required to submit monthly lists for your goods	a VAT-registered business in another EU country	N/A	month (for all supplies), or month (for goods) and quarter (for services)

 

2. Intrastat

Intrastat is used to collect statistics on the trade in goods between EC member states. It is not used to record trade in services, except for those used directly to move / sell goods, e.g. freight expenses.

Larger companies that exceed the thresholds for intrastat removals / acquisitions between member states must prepare a Supplementary Declaration each month, which is a more detailed record of their transactions between EC countries.

 

3. Monthly VAT returns

Generally, VAT returns are made on a quarterly basis. However, some businesses expect to receive repayments of VAT, and so they can opt to prepare VAT returns on a monthly basis.

Should the business find that it starts to pay out VAT rather than receive repayments, then it may have to go back to a quarterly scheme. Note that companies that have registered voluntarily are not allowed to have monthly returns.