The UK exited the EU VAT regime, Customs Union and Single Market from 1 January 2021. This means the loss of a range of compliance simplifications and the imposition of customs declarations, goods regulations, services and import VAT.
A Brexit Trade and Cooperation Agreement deal with no goods tariffs or quotas was agreed in time for the end of the Brexit transition period.
Here is a list of few of the key changes from 1 January 2021
| Area of concern | UK position |
| EU VAT Directive rules | The UK will no longer have to assume the EU VAT Directive rules into its own VAT Act |
| VAT rates | The UK will no longer have to maintain a minimum VAT rate of 15% and UK will have complete control over its reduced VAT rates. |
| B2B goods supply | All movements are now imports or exports, subject to UK or EU import VAT. Businesses moving goods now need two EORI numbers to move goods between the UK and EU |
| B2B services | There are no changes on the Brexit VAT on services for B2B transactions after the UK leaves the EU VAT regime. The reverse charge will still apply. |
| Postponed VAT Accounting Import VAT | The UK has introduced a Postponed VAT Accounting Import VAT deferral scheme so no cash VAT payment has to be made by business importers to UK customs. |
| Distance selling | Distance selling thresholds are scrapped for UK e-commerce sellers, which means UK sellers will have to consider EU VAT registration immediately. |
| VAT representative | Any UK business with a foreign VAT registration in the EU may now face the obligation to appoint a special VAT representative (similar rules are required in the UK for NETP VAT registration). These agents hold direct liability for any unpaid VAT, and therefore require cash deposits or bank guarantees in exchange. |
| Low value items | The low value consignment stock relief for £15 is scrapped now. VAT is payable at the point of sales if the consignment value is less than £135. |
| Online claim for EU refunds | UK businesses incurring EU VAT on travel, hotel or other expenses are no longer able to use the online VAT reclaim system operated via HMRC. Instead, they must use the 13th Directive paper-based reclaim process. This requires individual claims to each country where there is a VAT claim. Last online UK claims will be for the final quarter of 2020. |
| Northern Ireland | Northern Ireland will take up a special dual position now. Whilst NI remains within the UK VAT area, it tracks EU rules, including zero-rating for VAT on intra-community supplies across the Irish border. EU VAT on imports into Ireland via Northern Ireland are collected by the UK authorities. |
| EC sales lists | For the export of goods from Great Britain or the supply of services from Great Britain and Northern Ireland made to EU businesses on or after 1 January 2021, you will not need to submit EC sales lists. |
| Intrastat reporting for arrivals/imports
|
Businesses importing (arrivals) goods into Great Britain (UK minus Northern Ireland) from the EU are still be expected to prepare monthly Intrastat reports if over the £1.5m reporting threshold. |
| Intrastat reporting for dispatches/exports | No requirement to maintain Intrastat for dispatches/exports to the EU. |
