EC Sales Lists: New Rules for 2010

Continuing the series of articles describing changes to the VAT rules taking place 2010 this article will now cover the rule changes related to EC Sale List submissions. You should pay attention to these changes if you are receiving intra-EU supplies or services, as well as if you supply services or goods to businesses located in other EU Member States.

So, what are the main changes in this field?

First of all, till the end of 2009 ESLs were required only for B2B intra-EU supplies of goods. From 1 January 2010 on they will also be required for supplies of services to which a reverse charge applies in the customer's Member State. Other important rule that changes is the frequency of ESL submissions. Every Member State has several options to choose from.

In the UK ESLs relating to services can be submitted either quarterly or monthly – the choice is given entirely to business owners. With ESLs relating to goods the new rules are more complicated. The option of submitting ESLs quarterly will be available to businesses only if the value of the goods supplied to other Member States hasn't exceeded £70,000 (excluding VAT) in any of the previous 4 quarters. Otherwise, they will be required to submit ESLs monthly. From 1 January 2012 this threshold will be reduced – halved, actually – making £35,000. The business will be allowed to revert to the quarterly submission option if the value of goods supplied to other EU member States has been below the threshold for five consecutive quarters.

If the supplies fall under the exceptions to the ‘general rules' covered by (Article 194 of Council Directive 2006/112/EC) or if the recipient is not VAT registered, ESL submission is not required.

All business are free to choose to submit their ESLs monthly.

To learn more about these rule changes we recommend that you take a look at the ESL guidance and Revenue & Customs Brief 2/09.

Another important thing you need to keep in mind to stay on the safe side is that businesses that submit their ESLs on paper will have only 14 days from the end of the month to do so. Business that choose the electronic method will be given 21 days. The difference is explained by the fact that HMRC staff will need additional time to enter the data submitted on paper into the database. According to the ESL guidance available from the HMRC's website in PDF, there are several methods of electronic submission of ESLs:

• The on-line form.
• Bulk upload of data using a Comma Separated Variable (CSV) or Extensible Mark up Language (XML) file.
• XML channel.
• Using UN-EDIFACT format.

Businesses can choose any of the four methods mentioned above, whichever suits their needs best – or the paper method.

Further changes to the rules are expected in the coming years. All these measures are part of the anti-fraud package adopted by EU Finance Ministers in February 2008. They are also expected to modernise and simplify the existing system and will take place between 1 January 2010 and 1 January 2015.