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HMRC have published further online guidance to alert businesses to VAT changes that are taking place in relation to the ‘place of supply’ rules on 1 January 2010.
The proposed changes were included in the Budget, the main outcome being that there will be less VAT charged on service transactions between businesses based in different EU states after 1 January.
The customer will instead account for VAT on his own VAT return using the reverse charge mechanism.
However, an important outcome of the change is that a business making supplies of services covered by the reverse charge will need to complete an EC Sales List for the first time.
This is a major change to current procedures and it is important that UK businesses prepare for the change.
Independent VAT consultant Neil Warren explained: ‘The EC Sales List has been in place for goods for many years, and the existing form will continue to be used for businesses that sell services as well.
'However, as a planning measure, now is a good time for UK businesses to ensure they hold the VAT registration numbers of all of their EU business customers.
'This will not only give confirmation that the customer is “in business” but also make completion of the EC Sales list easier after January.'
Mr Warren also highlighted an important change relevant to businesses that sell goods to businesses in other EU countries.
They will be required to submit monthly EC Sales Lists after January (rather than quarterly) if the quarterly value of sales of intra-Community goods has exceeded £70,000.
This is an anti-fraud measure designed to give quicker information to governments about potential missing trader situations.
