EC Sales Lists – Tribunal issues penalty on business
Back in January of this year we prepared an update summarising how the rules in connection with the preparation and submission of EC Sales Lists (‘ECSL’) has been amended from 1 January 2010 and are now more onerous. Previously where a UK VAT registered business supplied goods to a business customer in another EC country this was recorded in the ECSL submitted by the business supplying the good. ECSL’s are usually submitted on a calendar quarter basis although businesses could submit them on a monthly basis if they so wished. A number of the rules for the preparation of these ECSL’s have been altered and can be summarised as follows:
• In addition to the supply of goods being recorded in the ECSL, ‘some’ supplies of services also require to be recorded. However, it is only those services which are subject to the reverse charge in the country where the customer is situated. This includes services of accountants, lawyers, consultants and advertising services but this list is not exhaustive and there are many other such services;
• Up to the calendar quarter to December 2009 ECSL’s could be submitted on a quarterly basis. However, from 1 January 2010 if the value of goods dispatched to business customers in other EC countries exceed £70,000 per quarter monthly ECSL lists require to be completed. The ECSL for services can however be submitted quarterly;
• The timescale for preparation and submission of ECSL’s has also changed and is now more challenging. Previously they required to be submitted within 42 days of the end of calendar quarter but this is being decreased to 14 days after the end of the period (month or quarter as applicable) for ‘paper’ returns and 21 days for ‘electronic’ returns. Therefore businesses that previously submitted returns on a quarterly basis may require to submit returns on a monthly basis (for goods) by 14th or 21st February 2010 for the month of January if the value of the goods dispatched exceeds £70,000 per quarter. Failure to submit the ECSL on time will result in a penalty being issued by HMRC; and
• There will not be a new form to complete for services only but services will be clearly indicated by inserting the number ‘3’ in the indicator box. The ECSL for services can also be completed on a monthly basis if it suits a business (as they are completing such information for goods) but there is no requirement to do so.
A recent case on the failure to complete appropriate EC Sales Lists was heard at the First-Tier Tribunal and this was released late last month. Corriform Ltd appealed a penalty notice in the sum of £500 in connection with EC Sales Lists not completed and submitted on time back in 2008. Corriform Ltd agreed that they were late in submitting these returns but they felt they had a reasonable excuse as the book-keeper who normally prepared and submitted them left their employment and three separate quarterly returns were submitted late. Corriform Ltd engaged their accountants to assist in catching up the backlog and this was completed before the case was heard. In summary, the Tribunal found that the book-keeper leaving was not a reasonable excuse for the late submission. However, tellingly the Tribunal advised that they may have agreed with Corriform Ltd if the April 2008 submission due by 12 May 2008 had been submitted by June or possibly July but it had not been submitted until 4 August 2008. The Tribunal found this time delay unacceptable.
This case is very important in the context of the new tighter deadlines for submitting EC Sales Lists from January 2010. These now require to be submitted within 14 or 21 days (see above) and not the original 42 days. It is therefore important that businesses who suffer staff turnover are aware that the Courts will allow some leeway as to late returns but not exceptional leeway. We recommend that you speak to us as early as possible if you incur staffing issues and we can assist you during the interim period prior to replacing staff who have left. If you wish further advice speak to your usual contact at Wylie & Bisset, telephone 0141 566 7000 or email info@wyliebisset.com.
