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Purchase of goods from the EU (to NI only)

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Introduction

The guidance below is for businesses in Northern Ireland (NI) only and will not apply to businesses trading in Great Britain (GB), i.e. the United Kingdom excluding Northern Ireland, after 31 December 2020. For GB businesses, please refer to Purchase of goods from the EU (to GB only).

The information on this page is for general guidance only and should not be taken as definitive VAT advice, since individual circumstances may vary. You should refer to HMRC guidance for details of your obligations for purchases of goods from the EU.

Summary

Under the Northern Ireland protocol, NI will be part of the UK VAT system whilst also maintaining alignment with EU VAT rules for movement of goods* (not services). Purchases of goods from the EU will follow the same VAT treatment as existing rules for purchases of goods between EU member states (referred to as 'acquisitions'). Therefore for VAT periods covering transactions on or after 1 January 2021, businesses in Northern Ireland purchasing goods from EU member states (including the Republic of Ireland) will generally be required to:

report the net value of purchases of goods from EU member states (acquisitions) in Box 9 of their UK VAT return (as well as Box 7)

account for VAT on the purchases (acquisitions tax) in Box 2 of the VAT return

*Movement of goods between GB and NI may differ, see Purchase of goods between GB and NI

Accounting for VAT on purchases of goods from the EU (acquisitions tax) - NI only

Firstly you will need to change the VAT status for your business by selecting Set Up>VAT and ticking the Business is situated in Northern Ireland or the EU box.

Acquisitions tax is the VAT due on the purchase of goods (but not services) from suppliers in other European Union countries. This is accounted for by the purchaser rather than the supplier. Acquisition tax is reported on Box 2. of the VAT return. You are also required to report the net value of these goods on Box 9. of your VAT return (as well as Box 7.).

To account for acquisitions tax in VT Transaction+, select the Purchases of goods from the EU option when entering purchases:

PAY and CHQ payment dialogs (if suppliers ledger not used)*

Tick the Purchase of goods from the EU box at the bottom left of the dialog

PIN - Purchase invoice dialog

In the Type of purchase (for VAT purposes) drop down list at the bottom of the dialog select the Purchase of goods from the EU item

*Please note that this option in not available in the Payments And Receipts dialog.

When you select the EU option in the above dialogs, an EU VAT payable box appears. You should record the acquisitions tax in this box at the appropriate VAT rate. This will ensure that this figure in included in Box 2. when you run the VAT return.

Assuming you can fully recover VAT on purchases, you should enter the same amount in the Input VAT box. This will ensure that this figure is included in Box 4. when you run the VAT return.

In the Total field, enter the net value of the purchase. The Net field should automatically update with the same value, assuming you can fully recover input VAT. The value in the Net field will then be included in Box 9. and Box 7. when you run the VAT return.

6_purchaseEC

Screenshot of a section of the PAY, CHQ and PIN dialogs when the Purchase of goods from the EU box is ticked