Date of issue: 1st March 2004

Changes in EU Vat From May

Chartered accountants Clement Keys, Birmingham is reminding businesses to prepare for the accession of 10 new countries to the European Union by contacting customers in these states and obtaining their VAT details in good time.

The firm points out that from 1 May business transactions with Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia will no longer be classed as exports of goods or services.

"From May onwards sales to customers in Cyprus, Malta and the eight Eastern European countries will become intra-community supplies," says Steve Simmonds, Director of VAT Services at Clement Keys, Birmingham.

"These supplies are typically zero-rated on despatch from the UK with VAT payable on acquisition of the goods by the customer and declared on their VAT return."

As a result of this expansion of the European Union, suppliers of goods to customers in the 10 new member states will need to include their customers' VAT number plus the two-letter country prefix identifier.

"Quoting an EC customer's VAT registration number on a sales invoice is the best evidence you can hold that your customer is in business and without it you may be called to account for VAT on the goods in the UK," adds Steve Simmonds.

"As well as quoting the customer's VAT number on the sales invoice you should also hold valid documentation to confirm the goods have left the UK."

Businesses trading with other member states should also remember that they are obliged to submit EC Sales Lists on a quarterly basis and possibly Supplementary Declarations for both Arrivals and Despatches.

The EC Sales List collects details such as the customer's country and VAT registration number, as well as the value of sales. The Supplementary Declarations are concerned with the type and value of goods acquired or despatched between member states.