Arthur Needham explains what information is required to complete your EC Sales list and how to submit it.
An EC Sales Lists (ESL) is a monthly or quarterly return that records sales of goods or services to VAT registered businesses in other EU Member States.
Returns can be made either electronically or by using the paper VAT101 form.
The following data is required:
- the country code;
- customer’s VAT registration number;
- total value of supplies in sterling; and
- completion of the indicator box to signify triangular transactions (2) or supplies of services (3).
Services as well as goods
The ESL originally only covered sales of goods, but from 1 January 2010 it was extended to cover business to business (B2B) supplies of services as well.
In principle, the Directive provides that ESLs should normally be submitted monthly, but it allows Member States to offer their businesses certain options.
The UK allows ESLs relating to services only to be submitted quarterly, on a calendar quarter basis. A business which is required to submit monthly ESLs relating to goods may still submit ESLs relating to services quarterly if it wishes.
How to submit ESLs
ESLs relating to goods can be submitted for calendar quarters, provided that the VAT-exclusive value of supplies of goods to other Member States has not exceeded £70,000 in any of the previous four quarters.
A business entitled to submit quarterly ESLs for goods can continue to do so unless the VAT-exclusive value of supplies of goods to other Member States exceeds £35,000 per quarter.
If a business exceeds the quarterly goods threshold by the end of the first or second month in a quarter, an ESL must be submitted at the end of that month, covering the month or months in that quarter. ESL’s must be submitted monthly from then on.
Once a business is on a monthly cycle it must continue to submit monthly ESLs for goods until the value of its intra-community trade in goods has been below the threshold for five consecutive quarters— it may then revert to quarterly submission if its trade remains below the threshold.
Online returns have to be submitted within 21 days and paper returns within 14 days of the end of the period.
If businesses have ‘non-standard’ monthly or quarterly VAT returns – for example to match 12 or 13 week accounting periods - a business can also apply for monthly or quarterly ESLs to cover the same periods.
A business can ask for an annual ESL if its total taxable sales do not exceed £145,000 and its annual sales to other EU Member States do not exceed £11,000, providing it does not sell new boats, aircraft or motorised land vehicles.
Electronic or paper
HMRC will accept paper returns but prefers electronic submissions. However, businesses have to separately register for online submission, even if they already have an ID and a password for another purpose, such as submitting VAT returns online.
Penalties
If an ESL contains a ‘material inaccuracy’ HMRC can fine a business £100. If an ESL is late or has not been submitted, HMRC will send notice informing the business of its default and asking for the ESL to be submitted within 14 days. If there are further defaults within 12 months, a fine of the greater of £50 or £5 per day the ESL is late is payable for a maximum of 100 days. For subsequent defaults the daily fine increases to £10 and then £15 per day!
Practical Tip:
If you trade with other Member States you will need to submit an EC Sales Lists. If the information is wrong or the return is late HMRC can fine you.
