(scotland) Limited
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UK Government Promise
“VAT will be a simple tax”
(Anthony Barber
Chancellor of the Exchequer)
The Reality
(since 1973)
“VAT is like a fiscal theme park, in which factual
and legal realities are suspended or inverted”
(Lord Justice Sedley 2001)
The Solution
Promises and reality are often different in Government.
Our mission at VAT Services (Scotland) Ltd is to try to make the reality simple and
understandable for your staff, so that your business or organisation complies with VAT regulations
with as little difficulty as possible. We do this by offering:


This is the third article in our Brexit series covering the VAT issues associated with Triangulation supplies by UK businesses to businesses in the EU.

As explained in our June 2020 news article, which can be accessed HERE, these articles are written in the expectation that the UK will leave the EU following the end of the transitional period on 31 December 2020 with a ‘no deal’ scenario. In the event of a deal being struck, we will have to examine the exact details of that deal and advise accordingly.

Triangulation (Pre Brexit)
This is a term used to describe a chain of intra-EU supplies involving three parties, situated in different member states. This simplification regime effectively results in the recipient of the supplies self-accounting for the supplies from a VAT perspective rather than requiring the intermediate company being liable to VAT register in either the supplier’s or the recipient’s member state.

This is best explained by way of an example:

Company X receives an order for the supply of goods from Company Y, with both companies being established in different EU member states. Company X is a UK company, with Company Y being a French company. However, for Company X to satisfy the order, it places an order with Company Z for the goods, this company being in Germany, to supply Company Y direct from Germany with the goods never entering the UK VAT system. Should no simplification rules be in place, Company X would have to either register for VAT in either Germany or France, being the two countries where either the dispatch or acquisition of the goods are made.

Where the simplified procedure is adopted by Company X for the Triangulation procedure to apply, the requirement for Company X to register in either France or Germany is removed, on the assumption that it is already VAT registered in the UK. Company X can opt for Company Y in France to account for the VAT that it, Company X, would have been liable for. Where this is adopted, Company Y must account for VAT and the burden on Company X is removed.

Company X (in the UK) includes its sale to Company Y (in France) in its EC Sales List submission and highlights the sale as being triangulation (using indicator code ‘2’). Company X does not have any Intrastat entry as the goods from Company Z do not enter or leave the UK but are dispatched direct from Company Z in Germany to Company Y in France.

Post Brexit
In the event of the UK “falling-out” of the EU following the end of the transitional period on 1 January 2021, the simplification procedure will no longer be available. Accordingly, Company X will be required to either register in Germany where the goods are made or, alternatively, in France where the goods are received. Where it adopts the latter, it will be required to charge French VAT (TVA) to its French customer.

Furthermore, Company X will be required to examine:

  • Incoterms and contracts to determine the exact terms upon which the supplies are made;
  • Customs documentation that may subsequently be required;
  • Whether customs clearance procedures are necessary or where the supply may be treated as a despatch and acquisition within the EU;
  • Who is acting in the transactions as either the importer or exporter; and
  • Whether a Fiscal Representative may be now required by Company X in France in light of it being established in a different country.

What is apparent is that there will be a requirement on businesses to understand the exact nature of their supplies with other EU member states where Triangulation procedures have previously been adopted and what additional VAT registration requirements will be needed after 31 December 2020, when the transition period for the UK leaving the EU ends.

If you would like to discuss how this affects your business, or alternatively that you wish a review to be undertaken of your supply chain, please do not hesitate to get in touch with Gary Moore at This email address is being protected from spambots. You need JavaScript enabled to view it. or 0141 636 9353/07812 061582.