As you are aware, the Brexit transition period comes to an end on 31 December 2020. From that date, supplies of financial services to the UK will be considered as being provided to a non-EU country. This means, from 2021, a potential significant boost to VAT recovery for Irish businesses providing financial services to UK customers.
If you answer “Yes” to each of the above questions, please read on.
Most financial service providers apply the previous year’s VAT recovery percentage to the input VAT in their VAT returns with a true up review performed at financial year end i.e. VAT returns in 2021 would use the 2020 VAT recovery rate. Businesses with UK income/assets will only receive the benefit of an uplift in VAT recovery in 2022 when they perform their true up review of 2021. Where the true up leads to a significant VAT repayment claim (for example where the proportion of UK income/assets is high), this will likely trigger questions from the Revenue Commissioners (Aspect Query or Verification Check).
To receive the benefit of the VAT recovery uplift much quicker, it should be possible to write to Revenue outlining a projected VAT recovery percentage for 2021. This should allow the benefit of the VAT recovery uplift to be taken during 2021 (up to a full year earlier than if you do nothing) and it will avoid a large claim building up that may trigger a likely Revenue enquiry.
Please contact us to discuss how we can help you receive a VAT refund much sooner.
For financial service businesses supplying or receiving services to/from the UK there are some VAT compliance changes:
You should ensure these changes are made to your systems to reflect the revised reporting obligations.
Finally, if you are likely to import any goods (e.g. office equipment, laptops) from the UK post 1 January 2021 you should ensure you have an EORI number to facilitate this.
Please contact us if you have any questions in regard to compliance issues arising from Brexit.