e-Tax Compliance

BREXIT – Effects on Electronic Tax Declaration

04.01.2021
brexit compliance

A new legal framework with its own rules to which companies will have to adapt.

“There will be broad and far-reaching consequences for public administrations, businesses and citizens as of 1 January 2021, regardless of the outcome of negotiations. These changes are unavoidable and stakeholders must make sure they are ready for them.” European Comission.

The United Kingdom’s separation from the European Union will directly impact company’s operations. Foreign and domestic companies that operate in the United Kingdom must adapt new compliance rules. The most severely affected companies will be those in trade and transportation sectors. Pertaining to eTax compliace, the HMRC has introduced many changes that directly affect digital tax declarations or “Making Tax Digital” (MTD) The tax information document 9 BOX VAT Return Message will change in the following ways:

Modifications to the information in boxes 2,8 and 9.

Information to Declare:

  • Box 2: Owed VAT during the current period pertaining to acquisitions in EC member states. 
  • Box 8: Total value of all goods delivered and related costs excluding VAT owed to EC member states.
  • Box 9: Total value of all goods acquired and related costs excluding VAT from other EC member states.

New Information to Declare:

  • Box 2: Owed VAT during the current period pertaining to intracommunity acquisitions conducted in Northern Ireland for EU member states. 
  • Box 8: Total value of intracommunity goods shipped, and costs associated excluding VAT from Northern Ireland to EU member states.
  • Box 9: Total value of intracommunity goods acquired and related costs excluding VAT conducted in Northern Ireland from EU member states.

Updates to VAT declaration notes for boxes 2,6 and 7.

Box 2

  • Only for merchandise transported according to the Northern Ireland protocol.
  • Demonstrate the owed VAT (not paid) on all the goods and services related which have been acquired in the current period from EU member states.

Boxes 6 and 7

  • In box 6 you must enter the total value of goods without VAT (supplies of goods and services). include products with classification zero, exempt products and those supplied from the EU from box 8.
  • In box 7 include the value of all the supplies (purchases of goods and services) without VAT. Include exempt supplies with classification zero and acquisitions from the EU from box 9.

EU Commerce according to the Northern Ireland Protocol.

  • Use these boxes if you have acquired goods in an EU member state according to the Northern Ireland protocol. Include related costs like freight insurance when they are part of the invoice or pricing on the contract. The values must exclude VAT.

All changes are mandatory since January 1st 2021. It is also important to remember that as of April 1st there can be no manual intervention in the generation of the 9 box vat return.

About Brexit

The Brexit process began in 2016 after a referéndum where UK citizens voted to leave the European Union. Four years later on January 31st 2020 following the ratification of the withdrawal treaty the United Kingdom stopped being a member of the European Union. From that moment a transition period lasting until December 31st 2020 began. The intention is to give companies and citizens time to adapt.

During this transition period the UK has continued to apply European Union legislation, but has been unable to participate in decision-making as it is no longer represented in any European institution. This time has also allowed the EU and UK to negotiate the details of their furure relationship.

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