Post-Brexit VAT Due Diligence

As a result of Brexit and expiry of the transition period, the European Commission Taxation and Customs VAT Information Exchange System (VIES) system (http://ec.europa.eu/taxation_customs/vies/) is no longer available to GB registered businesses.

The new system for UK-registered business is here – https://www.tax.service.gov.uk/check-vat-number/enter-vat-details

Although many businesses still ask for a copy of the VAT registration certificate as part of their supplier due diligence process, it is essential to remember that the certificate only shows that a VAT registration existed at a single point in time. Please consider the following alternatives:

  • Verify the VAT registration online as part of your invoice processing. It is necessary to consider that registration may have been valid when the invoice was issued, but no longer valid when payment is due.
  • Verify the VAT registration at periodic intervals throughout the relationship with the supplier
  • Use the online process while onboarding your supplier

The new HMRC service allows UK VAT-registered businesses to obtain proof they have performed checks. However, this is not guaranteed to absolve companies of financial liability for any VAT paid and subsequently claimed; strengthening the need for increased vigilance. Businesses knowingly or recklessly participating in transactions which fraudulently evade VAT can become jointly liable for the unpaid VAT.

You can report suspected VAT fraud here – https://www.gov.uk/report-vat-fraud