EU chain transactions and zero-rated goods guidance

Historically, goods dispatched to the EU have been listed on an EC sales form. HMRC has increasingly flagged instances of dispatches being missed off the list. Whilst the first omission may just incur a warning, it's worth being aware that penalties are increasingly being enforced that have the potential to scupper the supplier’s zero rating.

From the beginning of the year, a requirement has been in place in the form of a written statement that must be produced within 10 days following the month of supply, in cases where the buyer (or recipient) has arranged the transport of the goods.

To be valid, the statement should include certain minimum information regarding the goods, the acquirer of the goods and the means and date of transport.

In addition to the statement, from 1 January 2020, the submission of an accurate EC Sales List incorporating the intra-EU supply in question has also been made a requirement for zero-rating that supply.

Brent Goodwin, Newby Castleman’s VAT Manager, said: “These changes may well have passed under the radar with everything else that has been happening in both the UK and wider world.

"It is important that businesses are aware that if either of the new requirements are not met in relation to an intra-EU supply of goods, then any zero-rating in respect of those supplies becomes invalid and the supplier leaves themselves open to interest and penalties.”

Newby Castleman is one of the Midlands’ leading independent accountancy firms, with offices in Leicester and Loughborough. It offers a range of specialist financial services, business and tax advice for individuals and businesses.