VAT Import One Stop Shop – Latest Revenue Guidance on Joint and Several Liability for Intermediaries and Suppliers

One particular aspect of the changes was in relation to VAT due on distance sales of goods imported from outside the EU - the previous low value consignment VAT relief is now abolished. This means that all goods are now subject to VAT (previously goods under €22 were not subject to VAT).

Import One Stop Shop (IOSS)

The IOSS allows traders to register and declare import VAT due in all Member States through a monthly IOSS return in the Member State where they have registered for the scheme. Where the IOSS applies, the customer will be charged the VAT due on the supply at the time of purchase and VAT will not need to be paid at the point of importation.

The VAT collected by the supplier will instead be remitted through their monthly IOSS return. This scheme will only apply to imported goods where the intrinsic value of the consignment is under €150 (the scheme excludes goods subject to excise duty).

• EU established suppliers[1] can register directly for the IOSS in the Member State where their business is established.
• Otherwise, a non-EU established supplier, for example a UK supplier, must register for the IOSS indirectly through the appointment of an EU established intermediary.

VAT IOSS intermediaries – Joint and Several Liability

The potential liability of the intermediary and the supplier was caused some confusion, particularly as many UK businesses have needed to appoint Irish based intermediaries to continue their business operations in Ireland post Brexit.

It is therefore welcome that Revenue have recently clarified that while the intermediary will have responsibility for the payment of the VAT due and the fulfilment of the VAT obligations of the supplier, (i.e. filing of VAT returns and record-keeping), the VAT liability will remain the liability of the taxpayer.

Joint and several liability does not apply automatically and is only used in exceptional cases. For example, in the absence of standard risk management practices, Revenue may issue a notice to both the intermediary and the supplier to notify them that joint and several liability applies. The notification applies on a prospective basis.

An intermediary registered for the IOSS in Ireland is expected to engage in standard risk management practices, such as customer due diligence, and where an intermediary has concerns about this taxable person, they should inform Revenue. Revenue would not, in the normal course, seek to pursue an intermediary, where they have completed these risk management practices and has severed ties with the client where concerns are identified.

We have advised a number of UK businesses in this position – reach out to us if your business needs similar assistance.

[1] A supplier based in Norway may also directly register for the IOSS due to Norway’s VAT Mutual Assistance Agreement with the EU.