A tax ID or Tax Identification Number (TIN) is an identifying number used for tax purposes, such as to determine the business-to-business nature of a transaction, which is relevant to determine if indirect taxes (VAT, GST, etc.) should be applied to sales transactions. Tax ID validation is a commonly used method to identify the tax treatment of entities across the globe, but tax ID naming depends mostly on the adopted tax regime of the country. For example, in the EU, whose Member States are all in the VAT regime, it’s called a VAT ID, while in Australia and India, it’s called a GST ID because these countries are not under the VAT, but GST regime.
However, Tax IDs across the world are generally composed of a string of digits and letters, representing a unique tax identification of the business or individual in the respective country. In the EU Member States, the Tax ID for example includes a two-letter code of the country (e.g. IT 909254138).
How Brexit affected the validation of a UK Tax ID?
Under the Brexit Withdrawal Agreement, the UK had an exit transition period until December 31, 2020. Until then, any UK Tax ID could be validated through the VIES (VAT Information Exchange System), a service provided by the European Commission.
As of January 1, 2021, the UK exited the EU and its common VAT regime, and the validation of any UK Tax ID is no longer possible through the VIES service.
It is important to mention that, although Northern Ireland is a part of the UK, under the Northern Ireland Protocol, EU VAT rules will continue to apply after the end of the transition period. If you are trading under the protocol you’ll need to put an “XI” prefix in front of your VAT Number when communicating with an EU customer or supplier. This number (for example XI123456789 - instead of GB) can be validated through the VIES Service.
Use Fonoa Lookup to validate Tax IDs
Fonoa is already integrated with HMRC’s new database that replaced the VIES for validating UK VAT numbers.
Even more, our solution can validate tax identification numbers directly with the tax authorities in different countries across the globe, not only in the UK - for a complete overview and more accurate validation.
More tax-related changes for the non-UK businesses after Brexit
According to many, Brexit is the most tectonic change in the political sphere of the 21st century. It caused many political tensions but also has a strong impact on businesses dealing with UK companies, especially when it comes to taxes.
Some of the significant changes for UK and EU based businesses following the Brexit are:
- The UK exited the EU VAT regime - they will continue to use a VAT regime, but under their conditions, and not according to the EU VAT Directive.
- B2B intra-community supplies no longer exist - all B2B transactions are now subject to imports and exports.
- Distance Selling Threshold no longer applies - all movement of goods to EU consumers is not subject to import VAT. For example, if you are an individual consumer from Hungary, buy something from Amazon.co.uk, and the seller ships the item to you from the UK, that transaction will be subject to import VAT.
- UK sellers of digital services to EU customers are no longer members of the EU VAT MOSS single VAT return scheme - as of January 1, 2021, all UK sellers must register with the UK’s HMRC for the Mini One-Stop-Shop and follow the regular procedure for non-EU businesses.
More changes that affected UK and EU businesses after Brexit are available in the UK-EU Withdrawal Agreement.