VATPOSG3550 - Main rules: distance selling: businesses not registering for distance sales in destination Member State

This section sets out what to do if you find a business has not registered for Distance sales; either as a supplier into Northern Ireland (inbound) or from Northern Ireland to EU member states (outbound).

Distance selling (inbound) into Northern Ireland from EU member states

If you find a distance seller of delivered goods from an EU member state into Northern Ireland and the conditions set out in VATPOSG3520 are met such that the place of supply is the UK then you must take steps to register the business for VAT in the UK. This can be backdated subject to the Registration guidance provisions (VATREG).

VAT International Team in Liverpool can make VAT Information requests to EU Member States in respect of Northern Ireland if necessary.

The business might claim that it has already accounted for the VAT in an EU Member State and your action will result in ‘double taxation’. The ECJ has said (Case C-419/14 WebMindLicenses Kft) that the fact that VAT has been paid in one Member State does not preclude VAT being brought to account in another Member State under the Place of supply rules.

Distance selling (outbound) from Northern Ireland

Some UK businesses supplying goods from Northern Ireland may be making distance sales from Northern Ireland to EU member States and have not registered, but may be liable to account for VAT in those States.

If you become aware of distance sellers who are accounting for VAT in the UK you should establish their terms of business with their overseas consumers. If it becomes apparent that the conditions set out in VATPOSG3530 are likely to be met and the supplier should be registered in one or more member States, you should:

  • advise the business in writing to notify the relevant tax authorities of their turnover details and to make their own enquiries as to whether they are liable to be VAT registered in an EU Member State, see VATPOSG2100;
  • consider reporting the figures to the Member State following the guidance in VATPOSG3560; and
  • if they are liable to register in another Member State then HMRC will consider repaying UK VAT under the guidance set out in VATPOSG3560 on receipt of an error correction notice.

You should make it clear that you are not offering an opinion or making a ruling on whether a supply is liable to taxation in a specific place outside the UK or whether the supplier should be registered for VAT there: that is a matter for the supplier and the Member State to establish.

HMRC should not be giving rulings on the application of VAT outwith its jurisdiction and we have no powers to enforce registration or the accounting for VAT in an EU Member State. You cannot be satisfied that the distance selling conditions are in place such that the laws of the member state make the person liable to account for VAT there. Thus, by default, Section 7(7) continues to apply and the VAT is correctly due in the UK.

If we unilaterally say that the place of supply is not the UK, any VAT that has been accounted for in the UK will be liable to be repaid regardless of what EU member states may decide.