Brexit Changes 2021

This document outlines the changes in Surf Accounts due to the Brexit. To view the required information, click the appropriate link below.

Overview

In January 2020, the United Kingdom formally left the European Union. The UK entered a transition period from 1 February 2020 until 31 December 2020. During this period, the UK would continue, for the movement of goods, services and people, as if it were a full EU Member State.

After the transition period, from 1 January 2021, Great Britain (GB) will no longer be treated as if it is a full EU Member State for VAT purposes. However, after the transition period, Northern Ireland (NI) will continue to be treated as an EU Member State with regard to VAT on goods. NI will not be treated as a Member State with regard to VAT on services.

All these changes outlined will be live via two releases:

  • Irish changes will be live on 7th February
  • UK changes will be live on 22nd February
  • Northern Ireland changes will be live on 4th March

We strongly advise you prepare for the changes prior to releases, as per advice outlined below, and do not run your VAT Return before respective release dates.

This is general guidance for all of our users. Regarding any specific advice on what you should do or how something should be treated, you need to speak to your accountant or Revenue.

Key Information can be found at:

What will change in Surf Accounts?

Irish Businesses

What will change from 1 January 2021?

  • UK transactions will be no longer included on VAT Return, in respect of EU boxes
  • UK transactions/information will no longer be included on VIES and Intrastat Reports
  • Northern Ireland transactions will be included on VAT Return for goods only (E1 and E2 boxes only, Services are not be included so ES1 and ES2 boxes will not be affected)
  • Postponed Accounting introduced to alleviate cash flow on imports from the UK (and anywhere else outside the EU) and all other countries outside of EU, so instead of paying VAT at customs, users can account for it on their next VAT return instead

Irish Postponed Accounting

This was introduced to alleviate cash flow, so users can account for import VAT on their VAT Return. With this change, there will be a new box on the VAT Return (PA1) and three new boxes on the Return of Trading Details (RTD) report (PA2, PA3 and PA4). These new boxes are for transaction totals, where Postponed Accounting was used.

Postponed Accounting will be on purchases, where a Supplier is outside the European Union, and using a zero rated tax rate with a notional set up. This is the same set up of VAT Rate for Intra EU acquisitions. So if you have UK suppliers in use already and there is likely no change needed as “EUG” was likely set up before or it could have an alternative name.

To check if a VAT rate is set up for Postponed Accounting, or create one, go to Settings > VAT > Vat Rates > Select rate to check or click New and it should have the following set up:

If this rate is used on purchases, the purchase itself will have no VAT, but the correct notional amount will appear on the VAT Return and Return of Trading Details (RTD).

Ensure the right notional rate is selected 23% for example purposes.

UK Businesses

What will change from 1 January 2021?

  • EU transactions will be no longer included on VAT Return, in respect of EU boxes
  • Postponed Accounting introduced to alleviate cash flow on imports from outside the UK, so instead of paying VAT at customs, users can account for it on their next VAT return instead

UK Postponed Accounting

There are no new boxes on UK VAT Return. This will populate just the existing boxes on Return, when used, which is sales and purchase tax to net off (Boxes 1 and 4), and the net amount will populate purchases (Box 7).

Postponed Accounting will be on purchases, where a Supplier is outside of the United Kingdom, and using a zero rated tax rate with notional set up. This is the same set up of VAT Rate for Intra EU Acquisitions. So if you have Irish suppliers in use already and there is likely no change needed as “EUG” was likely set up before or it could have an alternative name.

To check if a VAT rate is set up for Postponed Accounting, or create one, go to Settings > VAT > Vat Rates > Select rate to check or click New and it should have following set up:

Ensure the right notional rate is selected 23% for example purposes.

Northern Irish Businesses

What will change from 1 January 2021?

  • While Northern Ireland still submits a UK VAT Return, they are treated slightly differently as considered EU for movement of goods. Note: You have to set your business country as Northern Ireland in Settings
  • EU transactions will be included on VAT Return for goods only
  • Postponed Accounting introduced to alleviate cash flow on imports from countries outside of EU, so instead of paying VAT at customs, users can account for it on their next VAT return instead

Northern Irish Postponed Accounting

This is the same as UK. There are no new boxes on UK Vat Return. This will populate just the existing boxes on Return, when used, which is sales and purchase tax to net off (Boxes 1 and 4), and the net amount will populate purchases (Box 7).

Postponed Accounting will be on purchases, where a Supplier is outside of the European Union, and using a zero rated tax rate with notional set up. This is the same set up of Vat Rate for Intra EU Acquisitions.

To check if a VAT rate is set up for Postponed Accounting, or create one, go to Settings > VAT > Vat Rates > Select rate to check or click New and it should have following set up:

Ensure the right notional rate is selected 23% for example purposes.

What do I need to change in Surf Accounts?

Contact may have the wrong country selected

If your Customers or Suppliers are in Northern Ireland and their country is set to United Kingdom, it will not be included correctly on your VAT Return, VIES or Intrastat report.

To change a Supplier’s country to Northern Ireland, go to Purchases > Suppliers > Open Supplier > Contact Information > Select Northern Ireland > Save.

How to change Business Country?

Go to Settings > Business Details > Country > Select Northern Ireland. If this is not changed, it will be treated as UK on Returns.

What to prepare in Irish Businesses prior to running VAT Return?

  1. Ensure contacts have correct country code set for Northern Irish contacts i.e. Customer/Supplier to be correctly set to Northern Ireland if located in Northern Ireland. If this is set to UK, they will have different outputs on VAT Returns.
  2. Use correct VAT rate as outlined above, where applicable.

What to prepare in UK Businesses prior to running VAT Return?

  1. Ensure contacts have correct country code set for Northern Irish contacts i.e. Customer/Supplier to be correctly set to Northern Ireland if located in Northern Ireland.
  2. Use correct VAT rate as outlined above, where applicable.

What to prepare in Northern Ireland Businesses prior to running VAT Return?

  1. Ensure contacts have correct country code set for Northern Irish contacts i.e. Customer/Supplier to be correctly set to Northern Ireland if located in Northern Ireland.
  2. Use correct VAT rate as outlined above, where applicable.
  3. Ensure your Business country is set to Northern Ireland, this is required to ensure the VAT Return is calculated correctly.

    Settings > Business Details > Country > Northern Ireland.

Additional Information and Steps