VBNB47210 - Specific issues: movement of own goods: background and legal basis

Goods moved from Great Britain (GB) to Northern Ireland (NI) are subject to VAT, following the end of the transition period on 31 December 2020. This is because, under the Windsor Framework, Northern Ireland is aligned to EU VAT rules concerning goods.

Businesses or public bodies who are registered for VAT are liable to VAT when moving their own goods from GB to NI. Where such goods are intended to be used for either non-business or both business and non-business purposes, the business or public body would potentially have faced input tax restrictions on both their purchase in GB and again on their movement to NI. This is because the VAT incurred for non-business purposes is not input tax and therefore cannot be recovered.

To prevent this double taxation, we have introduced legislation allowing affected businesses or public bodies to reclassify the original supply of the goods, treating the purchase in GB as if attributable to taxable supplies, allowing them full recovery of input tax.

This guidance sets out the conditions for adjusting the VAT that could not be recovered on the original purchase of the goods in GB and how to account for the output tax on the movement to NI.

Legal basis

Paragraph 31B of Schedule 9ZB VAT Act 1994 provides the legal basis for the reclassification of the original supply of goods used for non-business purposes in GB to use relating to a zero-rated supply. This is subject to certain conditions, which are set out in the next section of this guidance.