The first working week of January 2021 is complete and with that, the UK has officially left the EU. With the Brexit deal being signed over the Christmas period, we wanted to inform Business Central and NAV users as to how this will impact some areas within your systems.
The Synergy Technology team have been informed by Microsoft that they are making changes to the latest version of Business Central, so if your system is hosted on their platform, then you will automatically receive these changes when your system is upgrade this month. However, if you are on-premise, then you will have to update to the latest Cumulative Update to get these changes.
We would also like to make a note that Microsoft will not be adding any of these new changes to your reports, therefore you will either have to make the changes yourself to your layouts or contact the Synergy Technology team if you require our assistance so that they can be used as Customs Documents.
Note from Synergy: We are working to be in touch with all our clients as soon as possible, but if you have still been trying to take in what Brexit means for your business and we have not discussed these elements, then please reach out to us.
As we are sure you will agree, it has not been ideal for businesses having to wait until the 11th hour to know what the deal meant, but even Microsoft only made the announcement on the 1st January. For those of you who trade with the EU, it was good to see that we will still have zero tariffs, albeit the country of origin for products will cause plenty of headaches for some and the new import VAT will also add the administrative burden.
Business Central/NAV System Changes You Need to Consider
Aside from any changes that are required from a technical point of view to update your system for Brexit, we thought it would be useful to also list some advice below on how we think our Customers should make configuration changes to the system to assist with any imports from or exports to the EU from 1st Jan around VAT and Northern Ireland. Please note: this is not VAT or Customs Advice and you will need to seek this from your accountant or HMRC.
The below is a list of areas we believe need consideration for system changes.
There is going to be a cut off with transactions, so you need to understand any documents that are still open that have gone over the 31st December i.e. You have a Purchase Order raised to a supplier in the EU, but you have not received the goods. This document will be setup with the old VAT posting setup and needs to be changed prior to the goods being received.
Ideally all sales transactions would have been completed before the end of the 31st December, but again if there are open Sales Orders, Quotes or Invoices, these will need to be changed (i.e. the goods have not shipped to the EU).
VAT Business Posting Group
We recommend that you change the VAT Business Posting Group for all your Suppliers and Customers who are classed as EU. This will assist with splitting out transactions prior to 2021 and moving forwards.
To do this, we recommend you create a new VAT Business Posting Group called EU27 or EU2021. This change can be applied to the Customer and Vendor Cards and then these will be pulled through onto any new Purchase or Sales Document created after the change is made. All existing documents will show as the old VAT Business Posting Group, so please be aware of this.
Reverse Charge is no longer applicable to Goods, therefore any VAT Posting Setup combination for this needs to be made obsolete and replaced with a new VAT Business and Product Posting Group for EU transactions. We recommend, if you do not already have this, to have a Service VAT Product Posting Group so that you can split between Goods and Services.
Now that there is Import VAT on EU transactions, and the introduction of Postponed VAT, we recommend setting up a new VAT Product Posting Group called EUP or Postponed. This will work the same way that you post Import VAT for ROW transactions, but it allows you to separate these transactions. This will be used to post your monthly statement of import VAT and will then go on your VAT Return.
New Nominal Code on Balance Sheets
This is a personal choice, but some people are creating a new nominal code on the Balance Sheet for this transaction. We do not normally recommend VAT accounts have Direct Posting ticked as these should be posted to via Invoices, however with Postponed VAT it is likely to be via a journal and directly posted to the nominal therefore to post the transaction then ensure Direct Posting is ticked for this new nominal.
VAT Posting Setup
In the VAT Posting Setup, if you are using a journal to post the monthly statement of import VAT, you will need a new combination, which will be a blank VAT Business Posting Group and the new VAT Product Posting Group for Postponed VAT, this will then need the VAT Calculation Type to be Full VAT
Changes are required to the VAT Statement around Postponed VAT Accounting as well picking up the new changes to the VAT Business Posting Group for EU suppliers and customers.
New Country Code for Northern Ireland
With regards to Northern Ireland, we are recommending that you create a new Country Code (i.e. XI) and you add this to your Customer and Vendor cards where they are based there, this will then be possible to use when deciding on whether the EORI XI code is used
Other changes to Business Central and NAV include:
- The EC Sales List is no longer required
- The Intrastat report only needs to be run for Imports from the EU for the next year
- Review your IncoTerms (used as Shipment Method in NAV / BC) as this is going to be more important, especially if you are having to produce Commercial Invoices for deliveries into the EU.
Please, where possible, use your test system or a copy company in the live system to test out these changes prior to implementing them to make sure that you are happy.
We can help you with your Business Central/NAV
Fortunately, most of the standard system will cover these changes, but there will need to be some configuration changes to the system which one of your Super Users will need to undertake.
If you believe you need our assistance, then please contact us and we can book in a consultant with you to assist. Please note, support will not be able to make any system configuration / data changes for you on the fly, they will be around to assist and point you in the direction of where to make changes but any advice or assistance with changing the VAT structure in the system requires a consultant.
If you do require assistance please raise a ticket with the support desk (email@example.com) and clearly identify that it is related to Brexit in the subject title.
There are of course other elements still to consider, such as if your business trades B2C now that distance selling thresholds have changed, so if you have any unanswered questions or this has generated any queries then please do let the System Technology team know.