What is an EC Sales List (ESL)?
An EC Sales List is a document that outlines intra-EU sales between VAT registered businesses. EU tax authorities use these documents to ensure that VAT is being properly recorded by both parties in cross-border sales.
If your business is based in the UK, Brexit will have an impact on your intra-EU transactions. Read more on our blog: “Brexit and your EU imports & exports”.
ESL’s are generally completed as part of your VAT Return on a monthly or quarterly basis. After January 1st 2021, UK businesses may not be required to submit EC Sales Lists because they are leaving the EU. Depending on the Brexit outcome, Northern Ireland businesses may stay within the scope of EU VAT procedures.
What information goes on an EC Sales List?
The point of an ESL is to prove that you are reporting the correct amount of tax for reverse charge and cross border transactions. Some fields that need to be entered include:
- The EU VAT Registered business name
- The 2 letter country code of that business
- Their VAT number
- The value of the goods or services provided and its relevant code (1, 2, or 3)
There are 3 different codes to input on the indicator column:
- Code 1: The goods were provided directly from your business to their business
- Code 2: The goods were not provided directly by you, but rather your supplier sent then directly to your customer
- Code 3: Services that were provided in which the country of supply is the customer’s country, and they are in the scope of reverse charge
You will need to input this information for each EU business you sold to within that period.
How do you submit an EC Sales List to HMRC?
ESL’s are generally completed as part of your quarterly VAT Return. It can either be submitted online from your HMRC account or by post with a paper form.
They need to be submitted to HMRC either every month or every quarter depending on the value of the goods or services provided. If the value of supplies exceeds £35,000 in the previous or current year, you will need to submit the list every month. If the value is under the threshold, you can submit the list every quarter.
There are specific rules surrounding services, but if the services are within the scope of reverse charge, then you can submit the ESL on a quarterly basis.
EC Sales List submission deadlines
In the UK, you must submit your EC Sales List to HMRC within 21 days from the end of the quarter/month for online submissions. If you are using the paper form, it must be submitted within 14 days. If you submit the ESL late, you may incur fines from HMRC.
Simplified EC Sales List
If your business makes low-level reverse charge transactions, you may not need to submit a full ESL, but can instead submit a simplified version. You can submit a simplified EC Sales List if:
- Your yearly VAT taxable turnover does not exceed £110,500 (as of 2020)
- Your yearly intra-EU supplies do not exceed £11,000
- The sales do not include “new means of transport” (vehicles, ships, or aircrafts)
If HMRC allows you to submit the simplified list, you will not need to input the total value of supplies sold to each customer, you can just input £1. You will also not need to submit the list on a monthly/quarterly basis, only once per year on a date provided by HMRC.
Penalties for incorrect EC Sales List
If your submitted EC Sales List is incorrect, you will need to notify HMRC as soon as possible. You are able to manually correct the submission online up to 21 days from when it was initially sent.
If there are any errors that were not corrected by the deadline, you may incur fines from HMRC. The main inaccuracies HMRC will look into are:
- Incorrect VAT number
- Data missing from the list
- Incorrect code or value of goods
The fines depend on if this is your first penalty or if you have received one before. The fines start at £5 per day for a maximum of 100 days.