We are aware that VAT registered businesses have been receiving letters from HMRC recommending that an ‘EORI’ number (Economic Operator Registration and Identification number) should be applied for by 29 March 2019, in preparation for Brexit.
Regardless of what may or may not happen on 29 March, in our view, if, as a business, you are involved with the movement of goods, then applying for an EORI number is a prudent thing to do.
But, what is this EORI number and why would a business need it?
Businesses that buy and sell or transfer goods between the UK and other EU member states, will be used to the completion of additional boxes on the VAT returns, specifically:
In addition to this, there may be the requirement to complete EU compliance declarations, including:
Businesses that import or export goods will also be aware of the Customs clearance requirements, including the payment of VAT and possibly duty on goods being imported into the UK.
As part of these import/export requirements, businesses must have an EORI number. This number is a group of 12 digits specific to a business that imports and/or exports goods from the EU (each member state issues an EORI number which may be used in numerous member states).
For businesses that are registered for VAT in the UK, the EORI number is simply the prefix ‘GB’, followed by the VAT registration number with ‘000’ at the end to make up the 12 digit number. For example: GB 123 4567 89 000.
For unregistered businesses, it will be a series of digits usually starting with a ‘0’.
An EORI number must be applied for. A business that is VAT registered cannot just add 000 to the end of the VAT number, likewise an unregistered business cannot make up 12 numbers. Instead, the number must be approved and issued by HMRC.
In practical terms, an EORI number is requested by freight forwarders to clear goods through Customs to register that business as an importer and/or exporter – this number is then used by HMRC to process the documents and any import VAT payable by the importer is charged and either paid directly by the importer or by the freight forwarder on behalf of the importer. An import VAT certificate (“C79”) is issued to the business during the month following importation and this is used as evidence to reclaim VAT on a return – the freight forwarder’s charge and any invoice it might issue cannot be used to reclaim VAT.
Although VAT registered businesses have received the letters from HMRC, if any business not registered for VAT starts importing or exporting then an EORI number is still necessary to link to that business for payment of VAT and duty.
The result of the UK leaving the EU means goods will no longer be subject to current EU reporting via the VAT return. Instead they would be treated in the same way as goods being imported/exported from the EU – so an EORI number will become essential.
Registration is a relatively straightforward process and can be done online via HMRC’s website.
The EORI number lasts as long as the VAT registration number exists; if there are address changes these can be done by resubmitting the same application and using the tick box to confirm the enquiry relates to an existing EORI number.
If an unregistered business has an EORI number and becomes registered for VAT, a new EORI application should be submitted to HMRC to link the registration with the VAT number, so import VAT certificates can be received to reclaim input VAT (if eligible).
If you think you already have an EORI number, you can check by visiting the European Commission’s website and entering the number. Without an EORI number, a business may be seen as a private individual or “consumer”, goods could be delayed at the ports, and the business might not get a C79!
Irrespective of what happens on the 29 March, we would recommend registering for an EORI number. If you would like further information or assistance with an application, contact one of the Wilkins Kennedy VAT team to see how we can help.
The increase in popularity of Airbnb and similar accommodation providers raises the question of how these kinds of activities should be dealt with from a VAT perspective. Andy Dawbarn, Indirect Taxes Partner at Wilkins Kennedy, considers the VAT implications arising for users of these types of sites…
Charitable and non-profit making bodies are often under pressure to maximise their income-generating activities through exploiting their assets to the maximum possible extent. Whilst the reason for doing this is entirely understandable, the associated potential tax consequences can be overlooked, which can, in turn, give rise to unexpected tax liabilities. In this article, John Howard, Partner and head of Not-for-Profit at Wilkins Kennedy provides some thoughts on the issues arising.
HMRC has announced a one year delay on the implementation of VAT reverse charge to 1 October 2020. Whilst this is good news for construction businesses who were not yet prepared, it may cause additional work for those businesses who were ready to go.
Introduction of the reverse charge for construction services has been delayed and now takes effect from 1 October 2020. A business supplying goods or services is normally required to charge VAT and declare this to HMRC. However, with some UK specified supplies, the supplier does not charge and collect VAT on the supply. Instead, the customer is required to account for output tax to HMRC. This VAT is recoverable, subject to the normal rules and the mechanism is called the reverse charge.
Is Making Tax Digital (MTD) relevant to your academy?
On 1 April 2013, the government introduced the Annual Tax on Enveloped Dwellings.