The changes in the VAT rules for cross border sales to and from the EU are certainly creating chaos and confusion especially in the eCommerce sector.
We are now 6 weeks into the new rules and I have seen an increasing number of posts on small business forums indicating that many small eCommerce businesses feel unprepared and uneasy.
My concern is that the VAT Returns covering periods from 1 January 2021 have a high risk of misstatement.
Up to 31 December 2020, eCommerce sellers shipping goods direct from the UK to households in the EU, would pay UK VAT on those sales as long as they didn't breach individual country distance selling thresholds, or store their goods in EU warehouses. So in essence it was quite simple for small sellers to just assign 20% UK VAT rate to all receipts, irrespective of the Customer location.
From 1 January the EU customers are no longer subject to UK VAT at the point of sale. The risk is that #eCommerce sellers may not have reviewed and amended their systems and data collection processes, which might lead to overpayment of UK #VAT.
It is well worth reaching out to your accountants to seek help with this at the earliest opportunity.
Message me if your current #accountants cannot help.