VAT for Northern Ireland Businesses

Introduction

Under the Northern Ireland Protocol, Northern Ireland follows EU VAT rules for goods while remaining part of the UK's VAT system. This creates special VAT requirements when goods move between Northern Ireland and Great Britain, or between Northern Ireland and EU countries. The rules differ depending on whether you're VAT registered, the value and type of goods involved, and the direction they're travelling.

Northern Ireland's unique VAT position

Northern Ireland maintains alignment with EU VAT rules for goods under the Northern Ireland Protocol. However, Northern Ireland remains part of the UK's VAT system, with HMRC responsible for VAT operation and collection. This means different VAT processes apply depending on whether goods move between Northern Ireland and Great Britain, or between Northern Ireland and EU member states.

Moving goods between Great Britain and Northern Ireland

Personal travel by air or sea

When you carry goods from Great Britain to Northern Ireland by commercial air or sea transport, no VAT is due in most cases. You only need to account for import VAT on goods (including personal possessions) that:

• did not incur VAT of an equivalent value when originally purchased, and
• total more than £390 in value

When moving goods from Northern Ireland to Great Britain, no VAT is collected for individuals or non-VAT-registered businesses.

Sending goods

When you send goods from Great Britain to Northern Ireland, no VAT is usually due. You must account for import VAT where goods being sent:

• did not incur VAT of an equivalent value when originally purchased, and
• are valued under the gift relief threshold of £39 (this only applies to goods sent by individuals)

The sender is responsible for accounting for import VAT in these situations.

Commercial goods for unregistered businesses

If you carry commercial goods for trade or business use from Great Britain to Northern Ireland, no VAT is usually due. However, you must account for import VAT where:

• goods were originally purchased from a non-VAT-registered business, or
• goods have been made from materials that cost less than the value of the final product (for example, where you've built a musical instrument or ornament)

VAT-registered businesses should declare import VAT and reclaim it through their VAT return, resulting in no net tax effect. You should document these movements in your own records as evidence of correct accounting.

Personal reliefs for permanent moves

VAT is relieved on goods permanently moved between Great Britain and Northern Ireland for these reasons:

• change of residence
• marriage
• students studying
• honorary awards or decorations
• inheritance

VAT Retail Export Scheme

The VAT Retail Export Scheme (RES) allows retailers to offer VAT refunds on goods to visitors resident outside the EU and Northern Ireland who take goods home in their luggage. Northern Ireland retailers who offer the scheme can continue to operate it as they currently do.

The VAT Retail Export Scheme is not available in Great Britain.

When visitors move goods to Great Britain

Import VAT is due on all goods arriving into Great Britain. If a visitor removes goods to Great Britain and lodges an RES claim with the Northern Ireland retailer, the retailer must collect this import VAT and account for it on their VAT return at the same time as giving the VAT refund. Personal allowances are not available for journeys within the UK.

If a visitor leaves Northern Ireland for a country outside the UK and EU, they don't need to provide evidence that goods have been declared and applicable taxes paid at their destination. Retailers still need to obtain an endorsed VAT407 claim form.

VAT is not due on goods entering Great Britain from Northern Ireland if they have not been subject to a VAT RES claim.

Moving goods between Northern Ireland and the EU

VAT registered businesses receiving goods from the EU

If you're VAT registered and receive goods in Northern Ireland from EU countries, you'll account for the VAT through your VAT return. This is known as acquisition VAT. You must account for VAT at the same rate you would have paid if you'd bought the goods from a UK supplier.

You can normally reclaim some or all of this acquisition VAT if the purchases relate to VAT taxable supplies that you make.

Non-VAT registered businesses receiving goods from the EU

If you're not VAT registered and receive goods in Northern Ireland from EU countries, your supplier will charge VAT at the local rate in the EU country from which the goods are supplied.

If you buy goods worth £90,000 or more from EU countries, you must register for UK VAT.

Recording acquisition tax

You must enter the VAT details on your VAT return. The time of acquisition is the earlier of:

• the 15th day of the month following the one in which the goods arrive in Northern Ireland, or
• the date the supplier issued their invoice

You must account for the acquisition tax on the return for the period in which the acquisition occurs, and may treat this as input tax on the same return.

Valuing acquired goods

The VAT value of goods you bring into Northern Ireland is the same as if they were supplied by a UK supplier. If goods were priced in a foreign currency, you must convert their value to sterling using either the UK market selling rate at the time of supply (as published in national newspapers) or the period rate of exchange published by HMRC.

New vehicles, boats and aircraft from the EU

If you bring a new land vehicle, boat or aircraft into Northern Ireland from an EU country for transporting passengers or goods, UK VAT is due if the vehicle, boat or aircraft is classed as a New Means of Transport.

For land vehicles, you must notify HMRC using the Notification of Vehicle Arrivals system when you bring a vehicle permanently into Northern Ireland.

For boats and aircraft, VAT becomes due on the 15th day of the month following the month in which the boat or aircraft was made available to the customer, or the date of issue of the VAT invoice, whichever is earlier. HMRC will calculate the amount of VAT you owe and send you a demand for payment. You must pay within 30 days of the date the demand was issued.

Onward Supply Relief and transit arrangements

If you're importing goods into Northern Ireland from outside the UK and EU that are destined for an EU country, you must either:

• pay UK import VAT and put the goods into free circulation, or
• place the goods under the external transit arrangement

If you pay UK import VAT, you may be able to obtain Onward Supply Relief.

You can use community transit to move goods within the customs territory of the EU without paying import duties and other charges (including VAT) until they reach their final destination.

Intrastat declarations

You may need to complete an Intrastat Supplementary Declaration if your acquisitions of goods from the EU exceed an annual threshold. All Northern Ireland businesses trading with EU member states must declare the totals of their sales and acquisitions on their VAT return.

Sources

• How VAT will apply to goods moving between Great Britain and Northern Ireland
• Paying VAT on goods from the EU to Northern Ireland
• VAT on movements of goods between Northern Ireland and the EU

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.