If you trade with overseas businesses, there are major changes to the Cross-border VAT rules applying to goods and services.

These affect where, how and when VAT is accounted for, completion of EC Sales Lists for goods and services, and reclaiming VAT incurred in another EU country.

These changes take effect from 1 January 2010.

Do you supply services to or receive services from overseas businesses? Do you supply goods to other EU countries? Do you reclaim VAT incurred in another EU country? If so, you need to know about the changes below, which take effect from 1 January 2010:

• The place of supply for cross-border services to business customers will now be (under the new general rule) in the country of the customer. When these supplies are made within the EU, the customer will account for VAT under the reverse charge mechanism
• The time at which a customer accounts for VAT under the reverse charge mechanism is also changing
• There is a new requirement to file EC Sales Lists (ESLs) for supplies of services that are taxable in the customer's country. These must be filed every calendar quarter, within 14 days for paper and 21 days for online
• The same deadlines will apply to ESLs for goods. ESLs for goods must be filed monthly if the value of the goods exceeds £70k (VAT exclusive) in the current or any of the previous four quarters
• A new online service will be introduced for reclaiming VAT incurred in other EU states instead of the current paper-based claims.
  You will need, first of all, to register and enrol for VAT Online services at http://online.hmrc.gov.uk/registration. We suggest you do this in December 2009, to be ready for when the changes take effect

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