The European Community Sales List (ESL) is a report of the sale of goods and services to EU based business customers by a UK business to HMRC. Although the UK officially left the EU at the end of 2019 and the transitional exit period will finish on 31 December 2020, all EU related VAT reporting requirements remain very much in force.
What is the ESL?
In the name, the “E” stands for European Community and “SL” for sales lists. These lists contain all of the relevant information about the goods and services you sell to VAT registered companies and businesses in EU countries.
Reporting your monthly sales as they accumulate, you’ll need to file your ESL either on a monthly or quarterly basis.
The information is then used by tax offices inside the EU to ensure the right amount of VAT has been declared and paid by all parties involved.
You will automatically receive an ESL to complete when you fill out box 8 in your VAT Return.
When do I need to complete an ESL?
If you want to supply goods to VAT registered businesses in EC countries, you’ll need to fill out an ESL when you’ve started making sales. This applies even if you haven’t invoiced them, or if you have issued a credit note.
Selling goods to a VAT registered EU business, but having them sent directly from your supplier, also makes you liable to fill out an ESL. The same goes for moving goods to a VAT registered branch, office or subsidiary of your company based in another EC country.
If you have supplied services to VAT registered EU businesses and they cover the VAT, you’ll still need to complete your own ESL.
What needs to be included in your ESL?
In your ESL you’ll need to record each of the VAT-registered EU businesses you have supplied. That includes customer details such as:
- Their 2-letter country code,
- Their VAT registration number,
- The value of the goods and related costs, such as delivery. If you have not yet invoiced the customer or received payment from them, you can simply enter ‘0’ in this column,
- Whether you handled the goods yourself, or if they were sent directly from your supplier, and
- The value of the services you provided if it took place in the customer’s country, and whether or not the services are subject to a reverse charge.
VAT on your European sales
Using an ESL for both the goods and services you provide, you’ll need to ensure you record all EC Sales with the correct rate of VAT.
You will need their VAT number for all customers registered for VAT in European Commission States. Make sure both your customers’ and your own VAT numbers are registered with the VAT Information Exchange System (VIES), or the incorrect parts of your ESL will not be valid.
What is a simplified ESL?
This version of the ESL only needs to be sent out once a year, on a date agreed with HMRC.
It is simplified as, instead of digging through all of your European sales records for the past 12 months, you can just put in the nominal value of £1 for your supplies to each customer.
You can apply to submit a simplified ESL if:
- Your total taxable annual turnover is below the VAT registration threshold (currently £85,000) plus £25,500, which is £110,500 in total.
- Your supplies to EU customers comes to less than £11,000 per year.
- Your sales do not include New Means of Transport, as laid out by HMRC.
When should I send an ESL?
If the value of your goods exceeds the £35,000 threshold within any of your previous four quarters, you’ll need to submit your ESL each month.
If the value of all your goods comes to less than £35,000 in the current or previous four quarters, or if your services are subject to reverse charge of VAT in your customer’s country, you only need to send your ESL on a quarterly basis.
What if I get it wrong?
If you fail to submit an ESL when one is due, or submit an ESL late, you may be liable to a daily rate civil penalty. If you submit an ESL that contains a material inaccuracy and fail to notify HMRC about it, you may be liable to a penalty of £100. Material inaccuracies fall into 3 main categories:
- data missing from the EC Sales List
- lines on the EC Sales List are factually incorrect
- an invalid VAT number is used
The penalty levels are
- 1st penalty £5 per day
- 2nd penalty £10 per day
- 3rd penalty £15 per day
- Subsequent penalties £15 per day
Each penalty level runs for a maximum of 100 days.
SRC-Time are one of the South East’s leading accountancy firms in advising the self-employed, partnerships and companies in all aspects of their tax affairs and can assist in any issues raised above.
Our expert team is available to provide you with advice and can be contacted on 01273 326 556 or you can drop us an email at email@example.com or speak with an account manager to get any process started.