Under the Northern Ireland Protocol, Northern Ireland (NI) is still part of the UK VAT system with NI businesses continuing to submit one UK VAT return and having one UK VAT registration number, however a number of things have changed as follows:

Since 1 January 2021:

· NI remains aligned to the EU VAT rules for goods but not for services.

· In relation to transactions involving the movement of goods with NI, the UK is now being referred to as ‘GB’.

· The way VAT applies to supplies of goods between NI and GB, will broadly continue as it has done. VAT will be charged as if they are domestic UK supplies, even though it is recognised that supplies of goods between GB and NI (and vice versa) are exports and imports for VAT purposes.

· It should be noted that when a UK VAT registered business moves its own goods from GB into NI it will have to account for output tax on its VAT return, as if it had sold the goods to a third party. If it intends to use the goods solely to make taxable supplies, then it can claim the VAT as input tax on the same VAT return, subject to the normal recovery rules.

· A VAT registered business moving its own goods the other way, from NI to GB, does not have the same requirement to account for output tax.

· While VAT grouping will still be available to businesses in NI, VAT needs to be accounted for (and reclaimed, subject to the normal recovery rules) where goods are supplied by one group member to another and the goods move from GB to NI, or where supplies are made of goods located in NI at the time of supply, unless the supply is between group members that both have establishments in NI.

· The second hand margin scheme margin scheme will no longer apply to supplies of goods in NI where those goods have been brought into NI from GB. VAT will be chargeable on the full selling price. Many business sectors that use the second hand margin scheme will see the impact on their profit margins and consequently could end up with price increases for the end consumer.

Please get in touch with Lynn and the team if you’d like to discuss any further queries you may have.