Your guide to EC sales lists

When running your business, you’ll come across many types of records and accounts you’ll have to keep track of. One of those things might be an EC sales list, but where to start? And if you’ve never heard the term before, does an EC sales list apply to your business? This article will dive into the details and be a guide to EC sales lists by looking at the following areas:

• What are EC sales lists?
• Who needs to complete an EC sales list?
• What should an EC sales list include?
• How do I submit an EC sales list?
• What are the deadlines for submitting EC sales lists?
• How will Brexit affect EC sales list requirements?

EC stands for European Commission, and so an EC sales list is details of sales made in European territories for VAT reporting purposes.

The lists contain information on sales made to VAT registered companies in other EU countries, either on products supplied or services provided. Tax offices in the EU use the lists to verify if the correct amount of tax has been paid and declared by the parties involved in the transaction.

Previously, all businesses in Scotland, England, Wales and Northern Ireland that dealt in sales with other European Union countries had to submit EC sales lists for VAT purposes. But with Great Britain exiting the European Union in January of 2020, the rules have slightly changed.

Until January of 2021, VAT registered businesses in the UK that sold products or services to companies in other EC countries still had to submit sales details made before January 2021. However, after this date, there is no requirement to submit these lists in Scotland, England and Wales, and if you do so, the list will not be recognised by HMRC’s filing software.

Businesses in Northern Ireland will still have to complete an EC sales list if they sell to VAT-registered customers. In the Republic of Ireland, they also submit these forms, but it is referred to as the VAT Information Exchange System (VIES) return. 

There are quite a few indicators that tell you that you need to compile a sales list. First of all, this will only apply to your business if you are VAT registered and in Ireland (but this used to apply to companies in the rest of the UK as well). 

Here are some of the circumstances where an EC sales list will be required:

• You supply products to VAT registered businesses in other countries in the European Commission (members of the European Union, where VAT is part of the tax system). You will still have to submit an EC sales list if you have provided products but have not yet invoiced the business for the cost. The only exception to this is if you have supplied product samples for VAT purposes.
• If you have provided a credit note for goods or services to a VAT registered business in an EC country. You will still need to provide a list, even if the credit note was given in a different accounting period from the return you are reporting.
• If you supply services to VAT registered businesses in EC countries, and they account for the VAT on your invoice (this is called reverse charge VAT and is commonly used in the construction industry). Even though the paying business has paid the VAT directly to the tax authorities, you should still report it.
• If you move your products to a new branch or office, or subsidiary company of your business, that is in another EC country.
• If you sell products to a VAT registered company in the EU in one country (the buyer), you arrange for a supplier to send them directly to the client company instead of to you, and then you forward them to the buyer. This is referred to as triangulation and will still need to be included on a sales list, even though you have not handled the products yourself, as you have still facilitated the sale.

If any of these apply to the activities of your business, then you will be required to send in an EC sales list every three calendar months (or more frequently, depending on the EU countries you operate in, as some have different reporting requirements).

When filling in your quarterly VAT return, if you fill in box 8 (Box 8 states: total value of all supplies of goods and related costs, excluding any VAT, to EU member states), you will automatically be issued an EC sales list form.

The EC sales list is a form you will get access to digitally, but you can also get hold of a paper VAT101 form via the HMRC website.

When filling out your form, you should include the following details on every sale made to an EC country to a VAT registered business:

• Information about your EU customers, including business name, registered address, contact details, and their two-digit country code.
• Most importantly, you’ll have to include the customer’s VAT number as well as your own. Double-check the VAT numbers are registered on the VAT Information Exchange System (VIES) to ensure that your EC sales list will be valid. Without this information, you could run into issues with HMRC.
• Detail the value of the goods/products you’ve supplied in sterling (if submitting to HMRC from Northern Ireland).
• Also detail the value of any services you have provided to customers, in pounds sterling again. If you have supplied services and products in the same transaction, then use a separate line for the costs of the services. These services could include freight charges or insurance costs that you have charged the customer for their purchase of goods but are not included in the price of the goods themselves.
• Include what rate of VAT has been charged. Certain products or services may be on reduced rate VAT (5%), or even zero-rate VAT (0%), instead of the standard rate of 20% for the UK. Make sure your products or services are listed at the correct rate.

EC sales lists are submitted online via the HMRC portal. So, for example, if you select box 8 when filling out your quarterly VAT return, you’ll be given the right form to complete, although paper versions are available (but not preferred by HMRC).

EC sales lists are required every calendar quarter, so:

• January – March
• April – June
• July – September
• October – December

Your VAT return will also be quarterly but based on different dates.

Your sales list submission will include information on the three month period that has just passed. These can be filled out quarterly or sometimes even monthly, depending on your business activities.

You should be sending an EC sales list monthly if:

• The value of your products supplied is over £35,000 in the current sales period you are reporting, or in one of the previous four quarters you have reported. Simply put, if your quarterly sales have exceeded £35,000 in a three month period at any point in the last year.

The most common time frame is quarterly, and you should be sending in your European sales list every three months if you meet the following criteria:

• The value of your goods is under the £35,000 threshold in the current period you are reporting or has been under the threshold for the previous four quarters you’ve reported.
• The services you provide are subject to the reverse charge in the customer’s country.

It is also possible to submit an EC sales list to HMRC on an annual basis, with their permission, if you meet the following criteria:

• Total yearly taxable turnover is not more than £145,000
• The annual value of supplies to EU countries is not more than £11,000
• Your sales do not include new means of transport

These lists should be completed on an accrual basis. If you have made a sale but have not yet invoiced the customer or haven’t received the payment yet, you should still account for the deal on the sales list. Accrual accounting is where payments are recorded at the moment of the transaction or sale agreement instead of when the money is received by the business (or, in the case of expenses, paid out of the business account).

To fill out the form online, you simply need to select the correct drop-down options and input the right figures for your sales information, so take your time when filling this out, and use the HMRC tips sheet to help you in any areas that are not clear.

Under certain conditions, HMRC and other EU tax authorities will also accept simplified EC sales lists. Simplified lists are for businesses that do not do many cross-border transactions in European territories and mainly operate in one country where they pay their taxes.

This simplified form of the list can be completed once a year and submitted annually on a date agreed with the tax authority in that country. In the UK (now, only for Northern Irish businesses), the criteria are as follows:

• Sales of products or goods supplied to other European Commission countries do not exceed the UK threshold of £11,000.
• No new means of transport are involved in the transaction.
• If the businesses taxable turnover is less than the VAT threshold (£85,000) plus £25,500. So in the UK, the taxable turnover threshold would have to be less than £110,500 (threshold correct as of 2021).

Every threshold and criteria will be different in each EU state. Criteria should be double-checked with the relevant tax authorities (HMRC or other) when trying to find out if your business is eligible for the simplified EC sales list.

As this information now only applies to businesses in Northern Ireland that trade in other EU countries, you can find the up to date guidance from HMRC here that will help you fill out the form for the list. Refer to this information if you are new to filling them in. This article from HMRC will also include any changes in criteria or regulations that may be applicable now that the rest of the UK is no longer obligated to this reporting requirement post-Brexit.

You must complete the EC sales list every calendar quarter (not on the same quarterly period as your VAT return), and for HMRC, you have until the 21st of the month to submit the records online. If you choose to use a paper form, you have until the 14th of the month. You could face penalty charges if you do not submit the list on time.

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