ERP for Northern Ireland: Windsor Framework VAT, XI and EU

Northern Ireland in one view: UK VAT with EU rules for goods

Northern Ireland is part of the UK VAT system, filing with HMRC at the UK rates of 20%, 5% and 0%, but under the Windsor Framework it follows EU VAT rules for goods. A Northern Ireland business trading goods with the EU uses an XI-prefixed VAT number, files EC Sales Lists and accounts for acquisitions. It matters because a ledger set up for Great Britain misses these entries.

This page covers only what differs from the rest of the UK. VAT rates, the 90,000 pound registration threshold, Making Tax Digital for VAT, company accounts under the Companies Act 2006, corporation tax and PAYE work as they do in England, Scotland and Wales and are explained on our United Kingdom page. What is specific to Northern Ireland is the treatment of goods moving to and from the EU, the customs arrangements for goods arriving from Great Britain, and the extra boxes and reports that follow from them.

HMRC's VAT notice on movements of goods between Northern Ireland and the EU sets out the legal basis: Northern Ireland aligns with EU VAT rules for goods, with the Principal VAT Directive (2006/112/EC) as the primary EU law, implemented in UK law by Schedules 9ZA and 9ZD of the Value Added Tax Act 1994 and the VAT Regulations 1995.

• Tax authority: HMRC, as for the rest of the UK
• Currency: pound sterling; standard VAT rate 20%
• Goods traded with the EU: EU VAT rules, XI prefix, EC Sales Lists
• Services: UK VAT rules, as in Great Britain
• Goods from Great Britain: declarations, or the UK Internal Market Scheme
• E-invoicing: none in force; UK mandate announced for April 2029

The Windsor Framework: goods follow EU rules, services do not

The Northern Ireland Protocol, as revised by the Windsor Framework, keeps Northern Ireland aligned with EU VAT rules for goods only. HMRC's guidance on refunds states the boundary plainly: EU rules do not apply to supplies of services in Northern Ireland. A Belfast consultancy selling advice to a client in Dublin therefore applies the UK place-of-supply rules for services, exactly as a Manchester consultancy would, while a Belfast wholesaler selling stock to the same client follows the EU rules for intra-EU supplies of goods.

The vocabulary changes with it. For a Northern Ireland business, HMRC uses the word import only for goods coming into Northern Ireland from outside the EU, and export only for goods leaving for countries outside the EU. Goods moving between Northern Ireland and an EU member state are dispatches and acquisitions, as they are between two EU countries. Transfers of a business's own goods between Northern Ireland and the EU are treated as supplies.

Trade statistics follow the same logic. Northern Ireland businesses declare the value of their EU sales and acquisitions on the VAT return, and those whose EU trade exceeds the Intrastat thresholds also file supplementary declarations. HMRC's Notice 60 gives the thresholds as 500,000 pounds for arrivals and 250,000 pounds for dispatches.

Selling goods from Northern Ireland to EU businesses

A supply of goods from Northern Ireland to a VAT-registered customer in an EU member state is zero-rated when the customer has given you an EU VAT number, the goods are sent or transported to the EU, and you report the supply on an EC Sales List. Check the customer's number on the EU's VIES service. If the customer cannot give you a valid number, you must charge UK VAT. The goods must normally leave within three months of the time of supply, with evidence of removal obtained within the same period.

The tax point for such a supply is the earlier of the 15th day of the month after the goods are sent and the date of the VAT invoice. On top of the normal VAT invoice details, the invoice shows your VAT number with the XI prefix, the customer's EU VAT number with its country prefix, and a reference to a zero-rated EU supply of goods. You may invoice in any currency when the customer's EU VAT number is quoted; where UK VAT is charged, the VAT must also be shown in sterling.

A worked example: a Newry distributor ships goods worth 10,000 pounds to a VAT-registered retailer in Dublin on 3 March and invoices on 5 March. The invoice reads XI plus its VAT number, the customer's IE number and 'zero-rated EU supply'. The return for the quarter includes 10,000 pounds in box 6 and in box 8 and no output VAT, and the EC Sales List for the period shows the Irish VAT number and 10,000 pounds.

Buying goods from the EU: acquisitions, registration and refunds

When a VAT-registered Northern Ireland business receives goods from a VAT-registered supplier in the EU, it makes an acquisition. It accounts for acquisition VAT on its own return and, under the normal rules, reclaims it as input tax on the same return. The time of acquisition is the earlier of the 15th day of the month after the goods were sent and the date of the supplier's invoice.

Continuing the example, the Newry distributor buys stock worth 5,000 pounds from a supplier in France. It enters 1,000 pounds of acquisition VAT at 20% in box 2, reclaims 1,000 pounds in box 4, and reports 5,000 pounds in boxes 7 and 9. The net effect on the VAT payable is nil for a fully taxable business, but the figures must appear, and the supplier needs the XI number to zero-rate its sale.

Two further rules exist only in Northern Ireland. A business that sells only exempt or out-of-scope goods and services must still register for VAT if it buys more than 90,000 pounds of goods from EU VAT-registered suppliers in any 12-month period. And Northern Ireland businesses reclaim VAT paid on goods in the EU through the EU VAT refund system, with applications due by 30 September of the year after the refund year; VAT on services follows the UK rules instead.

Selling to EU consumers: distance sales and the One Stop Shop

Sales of goods from Northern Ireland to consumers and other non-registered customers in the EU start as UK supplies, with UK VAT charged. Since 1 July 2021 a single pan-EU threshold applies: once the total of such sales across all EU member states exceeds 8,818 pounds (10,000 euro) in a calendar year, VAT is due in each customer's member state at that country's rate.

Rather than registering in every member state, a Northern Ireland business can use the One Stop Shop Union scheme, submitting one quarterly return and payment for all its EU distance sales. Distance sales of excise goods such as alcohol and tobacco are different: they require VAT registration in the member state of destination whatever the value.

HMRC requires a separate record of distance sales to each EU member state, both to monitor the threshold and to complete the One Stop Shop return. In practice that means capturing the customer's country on every consumer order and keeping a tax code for each destination rate.

Moving goods between Great Britain and Northern Ireland

Goods brought into Northern Ireland from Great Britain need declarations and any tariffs due, unless the trader uses the simplified processes of the Windsor Framework. The UK Internal Market Scheme authorisation lets a business move goods as not at risk when they are for sale to, or final use by, end consumers in the UK. Such goods need only the Internal Market Movement Information, a simplified dataset based on commercial data, and carry no duty if they were in free circulation in Great Britain. Goods at risk of moving on into the EU are charged the EU rate of duty under the full customs process.

Qualifying Northern Ireland goods moving directly to Great Britain need no import declaration, and export declarations only in limited exceptions. Goods moving directly between Northern Ireland and the EU need no customs declarations at all. Traders moving goods between Northern Ireland and non-EU countries, including Great Britain, may need an EORI number starting with XI, and HMRC offers the free Trader Support Service for movements into Northern Ireland.

For the ledger, the customs route and duty status of each consignment affect landed cost, so a business with warehouses on both sides of the Irish Sea needs to know which stock arrived as not at risk and which carried EU duty.

Accounting, payroll and records: what stays UK-wide

Company law, accounts and audit are the same as in Great Britain. Companies registered in Northern Ireland file under the Companies Act 2006 with Companies House, and for financial years beginning on or after 6 April 2025 a private company may claim audit exemption if it meets two of three conditions: turnover of no more than 15 million pounds, assets of no more than 7.5 million pounds and 50 or fewer employees on average.

Payroll runs through HMRC's PAYE system as in the rest of the UK: the employer deducts income tax and National Insurance contributions and pays them to HMRC with employer contributions. VAT records must generally be kept for at least six years, and records forming part of the electronic account must be kept digitally in functional compatible software under Making Tax Digital.

The difference in the books is the volume of EU-related detail. A Northern Ireland trader's VAT account has acquisition VAT, EU dispatches and distance sales to reconcile, its sales ledger holds EU VAT numbers that must be validated, and its purchase records need to show which suppliers invoiced under the EU rules.

Cities and regions: where the rules differ

Within Northern Ireland the rules do not change from one city to another: a business in Belfast, Lisburn, Bangor or Craigavon follows exactly the same VAT, customs and reporting rules as one in Armagh, Ballymena, Coleraine or Enniskillen. The difference that matters is between Northern Ireland as a whole and Great Britain, and between Northern Ireland and the EU.

Businesses near the land border, in Derry~Londonderry, Newry and Enniskillen, often trade daily with customers in Ireland. For goods, those sales are intra-EU style supplies under the Windsor Framework, with no customs declarations for goods moving directly to Ireland, but with XI invoicing, EC Sales Lists or distance-selling rules as described above. For services, the UK rules apply.

The currency is the pound sterling. Invoices to VAT-registered EU customers may be issued in euro when the customer's VAT number is quoted, which suits cross-border trade, but any UK VAT charged must be shown in sterling.

• Belfast, Lisburn, Bangor, Craigavon: same rules as the rest of Northern Ireland
• Derry~Londonderry, Newry, Enniskillen: frequent cross-border goods trade with Ireland
• Northern Ireland to Ireland: no customs declarations for goods moving directly
• Great Britain to Northern Ireland: declarations or UKIMS

An ERP checklist for a Northern Ireland business

Test these points with a real month of transactions, including one EU sale, one EU purchase and one consignment from Great Britain, before choosing a system.

• XI-prefixed VAT number on invoices to EU customers
• Customer EU VAT numbers stored and validated
• Zero-rated EU supply and acquisition tax codes separate from UK ones
• VAT return figures for boxes 2, 8 and 9 alongside boxes 1 to 7
• EC Sales List data by customer and period
• Distance sales by member state for the One Stop Shop
• Landed cost including duty for goods at risk
• Stock by location for Great Britain and Northern Ireland sites

How Skyline Nexus ERP handles Northern Ireland requirements

Skyline Nexus ERP covers the ledger, stock and reporting side of a Northern Ireland business. Each business location has its own invoice scheme and invoice layout, so a Belfast site and a Great Britain warehouse can number and print independently, and stock is held per location. Tax rates and tax groups are set in Settings > Tax Rates, so UK standard, reduced and zero rates and a separate zero-rated EU supply code are kept apart. With auto-post switched on, sales, purchases, payments and expenses post balanced journals in the background, with VAT computed per line on the same basis as the tax report. The VAT Return screen prefills tax-exclusive sales and purchase bases and VAT for a date range and location. Invoices can be issued in euro with a manually entered exchange rate while the ledger stays in the base currency.

EC Sales List, One Stop Shop and Making Tax Digital submission connectors are part of our national roll-out, which goes market by market: tell us you trade from Northern Ireland and we will confirm the go-live date for your business. Until then, acquisition VAT is posted with a balanced manual journal, the figures for boxes 2, 8 and 9 and the EC Sales List are compiled from the Excel exports of sales and purchases using the separate EU tax codes, and the return is submitted through MTD bridging software.

Stock transfers between Great Britain and Northern Ireland locations move quantities between branches, and a short journal records any value moved between them. UK payroll connectors are also on the roll-out list; meanwhile payroll runs in HMRC-recognised software and posts a monthly journal. Posted journals are corrected by reversal, periods can be closed and locked, and the Audit Trail records changes to accounting records with old and new values, the user and the IP address.

Rates, regimes and deadlines in this summary change, and many countries are actively legislating on e-invoicing. This is general information, not tax or legal advice — confirm the current position with the authority named above or with your tax adviser before you rely on it.