Newsletter 18/06/2021

I hope you have all enjoyed the wonderful weather we have been having? Although saying that, as I write this, it is pouring with rain! Classic English summer.

In this newsletter we look at Ecommerce Import One Stop Shop (IOSS) and SEISS Tax Return Issues

Import One Stop Shop

Who should consider registering for IOSS?

• Great Britain (GB) businesses (which excludes Northern Ireland), selling goods with a value not exceeding €150/£135, via their own website, to EU customers.

• Online marketplaces (OMP).

• It should be noted that it is optional to register for IOSS.

When can you register for IOSS?

• You can do so now and the chosen portal opens for use from 1st July 2021.

What is happening on 1st July 2021?

• The EU VAT ecommerce rules are changing.

• All commercial goods imported into the EU from GB will be subject to VAT irrespective of their value.

What is the aim of IOSS?

To facilitate and simplify the collection, declaration and payment of the VAT for distance sales of imported goods to the EU with a value not exceeding €150/£135.

Does IOSS account for all supplies of goods to the EU consumers irrespective of the value?

It covers distance sale of goods that are:

1. Dispatched or transported from outside the EU at the time they are sold.
2. Dispatched or transported in a consignment with a value not exceeding €150/£135.
3. Not subject to excise duties (for example – alcohol or tobacco products).

How do you register for IOSS?

• Each EU member state has its own online IOSS portal.

• If your business does not have a business or fixed establishment in the EU then you can choose which EU member state to register for IOSS.

• Once registered you will be issued with an IOSS ID number.

Is a local EU intermediary (agent/accountant) required to enable you to register?

• The EU states that where they have concluded an agreement on mutual assistance (AMD) for the recovery of VAT (e.g. Norway) then no intermediary is required.

• However, the EU member states can’t agree whether or not GB have an AMD in place. For example: France - no intermediary required. Eire, at present, an intermediary is required.

• If the goods originate from a country where no AMD is in place then an intermediary is required.

How does IOSS work?

• You will be required to charge VAT at the point of sale based upon where the customer belongs (e.g. the Portuguese VAT rate if the customer is based in Portugal).

• Your goods should be clearly labelled with your IOSS ID number.

• Customs, at the country of destination, will verify your IOSS ID number.

• You will need to declare the VAT collected at the point of sale on your monthly IOSS return.

• You then pay the VAT across to the EU member state’s fiscal authority where you registered for IOSS.

• That EU member state will then distribute the VAT amongst the various other member states based upon the IOSS return submitted.

How do I work out if the value of my goods do not exceed the €150 limit?

This is calculated with reference to the price of the goods but:

1. Excluding: transport and insurance costs, unless included in the price and not separately itemised.
2. Excluding: any other costs itemised separately on the invoice (e.g. licence fees, tooling costs).
3. Including: any other taxes and charges as ascertainable by the customs authority.

What happens if I don’t register for IOSS?

Depending upon the terms of the trade either:

1. The consumer has to pay the VAT and any clearance fees charged by the courier or the seller. Or
2. You may need to register for VAT in the EU country of destination and deal with the import VAT and charge local VAT on the sale.

What happens if I sell my goods through an OMP?

The OMP will be the ‘deemed’ supplier to the EU customer and will be liable to account for the VAT through their own IOSS return process.

Your supply to the OMP will be ‘zero rated’ for VAT purposes.

Things to consider

• Is your website set up to cope with the varying VAT rates applicable across the EU member states?

• Based upon the number of EU countries you export to and the level of trade involved, is it best to register for IOSS or not?

• What is the cost of appointing a local intermediary? Is it best to register in a country where a local intermediary is not required?

• Important to note that the EU expect records of IOSS sales to be kept for 10 years.

• Is the level of trade with the EU such that it is worthwhile setting up a fixed establishment/business within the EU?

What if I am a Northern Ireland (NI) online seller of goods to the EU consumer?

• Under the Northern Ireland Protocol, you are effectively part of the EU VAT regime in respect of goods but not as regards services.

• If not selling through an OMP, NI businesses can opt to register for the EU One Stop Shop

• From 1st July 2021, an annual threshold of €10,000 will be introduced for intra EU cross-border supplies of goods. Anything up to this threshold remains subject to UK VAT.

How can we help you?

• We can call upon VAT specialists to help you through this process and to look at the best way forward for your business.

SEISS Tax Return Issues

When should the SEISS grants be taxed?

• They are taxable in the tax year the grants are received.

• For tax purposes you ignore the GAAP and basis period rules.

• It is likely that SEISS grants 1, 2 and 3 were received in 2020/21 tax year.

• It is likely that SEISS grants 4 and 5 may be received during the 2021/22 tax year.

Where can you find the relevant tax legislation?

• Finance Act 2020 Schedule 16 para 3(3)

Important to note

• SEISS grants are treated as trading profits when looking at a person’s pension position and any loss set off.

• SEISS grants are potentially liable to Class 2 and Class 4 NIC in the year they are received .

• If you made a claim to reduce your 2020/21 payments on account, you may want to revisit the situation if you did not take account of the SEISS grants.

• The SEISS grants may also have an impact on the 2021/22 payments on accounts.

• Unless the partnership exception rule applies, do not include the grant payments in the turnover figure on the SA Return, otherwise there is a danger it could be taxed twice.

• Any repayment of the grant, in full or in part, should be taken into account when completing the SA Return.

• As you was not involved in making the SEISS claim for the client it may be wise to see the bank statements for the whole tax year to confirm the payments which the client has received.

Are there any exceptions to the rule?

• Where the partnership agreement states that the SEISS grants should be treated as part of the partnership income and distributed to all the partners.

• The grant should have been paid directly into the partnership bank account.

• If that is the case, the tax treatment will be in line with the normal accounts basis rules.

How should the SEISS grant be reflected in the accounts?

• There is no official edict from HMRC.

• It may be wise to include it as a separate item within the turnover figure.

• When arriving at the adjusted taxable profit the grant received in the accounting period should be deducted.

• If the grant is repaid, in part or in full, after the accounting year end, but prior to the submission of the accounts, then make the adjustment in the earlier accounts.

Where should SEISS be reflected on the Return?

Tax Return Type	Form Number	Box Numbers
Full self-employment	SA103 (F)	70.1 plus 20.1 on page TR8
Short self-employment	SA103 (S)	27.1
Short Tax Return	SA200	31.0A and 13.0
Full Partnership	SA104 (F)	9.1 plus 10.4 re SA800
Short Partnership	SA104 (S)	9.1 plus 10.4 re SA800

Like always, if you have any questions, please do not hesitate to get in touch.

info@togetherwecount.co.uk

www.togetherwecount.co.uk

https://g.page/Together-We-Count-Limited?gm

01273 569088
0114 400 0119