Businesses selling goods from Northern Ireland to consumers in the EU have to pay VAT on the sales if the total exceeds the distance selling threshold of €10,000. This threshold is much lower than the UK VAT registration threshold of £85,000 per annum.
To avoid having to register for VAT in up to 27 EU member states, businesses can instead choose to use the One Stop Shop (OSS) Union scheme to manage the VAT on their distance sales of goods from Northern Ireland to the EU.
HMRC has published a notice, which has force of law, that is of particular relevance to small Northern Ireland businesses trading below the UK VAT registration threshold that wish to make use of the OSS. It sets out certain legal requirements to be met by such businesses.
The details are as follows:
1 A person making a request to register for the OSS scheme must have a valid VAT registration number and be identified as a “relevant Northern Ireland trader” under Part 6 of the Value Added Tax (Northern Ireland) (EU Exit) Regulations 2020.
2 If a person does not have a valid VAT registration number, is not liable to be registered for VAT, and does not wish to register voluntarily, the person must make a request to be allocated a valid VAT registration number for the purposes of using the OSS scheme. This request must be made before, and in addition to, a request to register for the OSS scheme.
3 A person who does not wish to be registered for VAT must enter the ‘VAT registration portal’ and select “63990 Distance sales of goods (below UK VAT threshold) for OSS purposes” when asked to search for a business activity when applying for a valid VAT registration number.
4 Where a person has made a request to be allocated a valid VAT registration number, HMRC must allocate a valid VAT registration number for the purposes of using the OSS scheme with effect from the day on which the request is made.
5 Where a person’s registration under the OSS scheme is cancelled, HMRC must also cancel that person’s VAT registration number, where that number is used solely for the purposes of the OSS scheme.
ICAEW Know-How from the Tax Faculty
This guidance is created by the Tax Faculty, recognised internationally as a leading authority and source of expertise on taxation. The Faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.
More from the Tax Faculty
Stay up to date with the latest developments in tax by signing up to the Tax Faculty's weekly enewsletter
Comprehensive support for Tax practitioners each month from the Tax Faculty and expert contributors.
Expert advice from the Tax Faculty's technical managers on all the developments in tax policy and practice.