There has been quite a lot of confusion surrounding the new VAT rules that will come into effect from January 1st 2021. This has mainly been due to the fact that Northern Ireland will have dual status, in the sense that the country will stay aligned with the EU VAT rules for goods, but will also remain as part of the UK’s VAT system. This of course gives it quite the unique position, since the UK is leaving the EU single market; but, the Northern Ireland Protocol must be followed. So how will this effect trade with Northern Ireland? This article will outline the changes that are coming, and also what you need to do to prepare for them.

The Northern Ireland ‘XI’ Number

Whilst is true that transactions between Northern Ireland and the UK must be treated as exports and imports, the HMRC is using existing flexibilities in order to class these transactions as regular UK VAT transactions; meaning that UK input and output VAT would be due. However, rather than using GB for invoices, you must now use XI.

This will be relevant for goods that are located in Northern Ireland at the point of sale, goods supplied by Northern Ireland by VAT registered EU businesses, or the sale or movement of goods from Northern Ireland to the EU.   

There will be no need to apply for a new XI VAT number, businesses must simply substitute the GB from their invoices to XI so it is clear differentiated from normal UK transactions. It is also worth noting that goods moving in transit between Ireland and the EU via the UK – known as the UK Land Bridge – will have special arrangements to minimise the disruption of existing trade.

Differences Between B2B For Ireland And UK

When it comes to business to business goods movements, there is a difference between Northern Ireland to Ireland and Northern Ireland to the UK. When NI businesses trade with Ireland, these transactions will be classed as ‘movements across internal EU borders’- in other words, they will remain as intracommunity VAT zero-rated transactions.

However, in the case of B2B sales from Northern Ireland to the UK, these will be treated as exports and imports for VAT. Essentially, this means import taxes in the form of VAT and excise duties are due.

However, there is further complications as the UK VAT on Northern Ireland to GB VAT interpretation is in variation to this. It has chosen to treat GB to NI as a domestic transaction, in order to allow it to be flexible, and is prioritising the integrity of the UK’s VAT union. This means it is considering its sales VAT as simulating the effect of import VAT rather than as a domestic supply.

What About Business To Consumer?

If a good/service is moving from the UK to Northern Ireland, then UK VAT is due and should be charged by the vendor. What is worth noting though is if the goods are actually going to an Ireland address and moving through Northern Ireland, then they are classed as an import. As it stand, if they do not exceed 22 euros then they are exempt from VAT. However, just like the UK’s small concession limit, this will be abolished in July 2021.

Northern Ireland will have slightly different rules when it comes to online market places from the UK. Whereas from January 1st 2021 when goods are sold from overseas to UK consumers using a online market place the tax obligations are placed on the online marketplace, if an overseas seller sells NI goods to a NI consumer the obligations will NOT be transferred to the Online Marketplace – they will remain the responsibility of the online seller.


These rules will be very difficult to navigate as there is going to be only minor, but significant, differences between the way the EU will interact with Northern Ireland and the UK when it comes to tax.

But don’t worry, that’s where we come in.

Here at J & P Accountants, we understand that the prospect of trying to comply with all those tax regulations can be daunting.

If you are a business who participates in cross border e-commerce, we would be more than happy to help you register for VAT, file your VAT returns, and help you comply with VAT in case your account faces any issues. At J&P, helping your business is our passion, and we understand that companies across the UK are at risk now more than ever. We are here to support you through the Coronavirus crisis and the busy festive period, so please do not hesitate to give us a call on 0161 637 1080 or send an e-mail to