The UK VAT system after Brexit (Part IV)


Surely many have heard, and experienced, that the British approach certain issues in a strange way; This is no different in the VAT system. I will now introduce some of those.

In our series of articles on the UK VAT system so far, we’ve looked at the major changes to the most common types of returns, but at the end of the series I’ll introduce some British features. Surely many have heard and experienced that the British approach some issues in a certain way, and I will present some of them to the interested reader.

The first advantage is that in the UK, by January 1, 2021, if a taxable person imports goods from a third country, that is, imports, even the largest taxable persons have to pay customs duties for the first time, which they can claim after receiving the tax receipt. Reverse taxation became available after the implementation of Brexit, but unlike domestic practice, it has become not only a ‘privilege’ for high-performing taxpayers, but all taxpayers can take advantage of this opportunity. The tax authority issues a monthly statement of the amount of VAT payable on imported goods, which can be downloaded online from the tax authority system. Of course, this certificate only covers transactions that have not made it to Northern Ireland. Getting the system started was very difficult, often in the first few months, when the import transaction itself was included in the multi-month certificate, so customers or their service providers had to be very careful with transactions for the previous months to avoid repurchases. reports.

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It is also worth noting the frequency of VAT returns and deadlines for their submission in a few lines. In the UK, you can file a VAT return on a monthly, quarterly or annual basis. The deadline for submitting a return is always the seventh day of the second month following the return period, if it is a weekend, the last business day of the week. However, large taxpayers have to wait for a shorter period, as they do not receive an additional seven days, but are required to file a return by the last day of the month following the return period. Given that these taxpayers typically file quarterly returns, they must also file two advances filed within a quarter and then file the difference with the IRS when the return is filed. The advance is imposed by the IRS based on the previous year’s tax liability for a period of one year. It is also a British curiosity that a quarter can be not only a normal quarter, but also a slippery quarter, i.e. a quarter can turn a month or even two months out of a normal calendar quarter, i.e. there is a quarter in February-April or March and May.

In general, it can be said that the telephone service of the IRS, in addition to its difficult access, and even the information available from employees, who often seem unprepared when asking various questions, is completely unreliable. It is very difficult to reach an official by phone anyway, because when we call the IRS we don’t use the buttons to select the case we want to request information about, but we have to say in a few words what case we are calling. Whether we’re narrow-minded or talkative, a keyword search engine can go to interesting places within the IRS organization.

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Finally, I think the British advantage is that there is no possibility of self-monitoring in the UK. There is no need to return the return file with the correct numbers, which will overwrite the previous numbers, but you will need to notify the IRS that we made a mistake during the periodic return. The cause and consequences of the error must be shown in detail, of course the correct figures must be made and this must be submitted to the IRS, which will decide the amount of the fine individually and in full. Those who made a mistake should explain in detail the steps they will take to prevent similar mistakes from happening in the future.

The author is Peter Molnar, an independent tax advisor.


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