WooCommerce EU / UK VAT plugin, and the end of the EU/UK transitional period

This post is for users (current or potential) of our popular EU / UK VAT compliance plugin, which is installed on around 5,000 websites.

As most users will be aware, at the end of December 2020, the EU/UK’s transitional arrangement ends, and the EU and UK become separate VAT zones. (N.B. The EU VAT zone also includes Monaco as well as all EU members, and the UK VAT zone includes the Isle of Man as well as countries which are members of the United Kingdom). This means that sellers of goods to any of the involved territories will need to work with their accountant to re-evaluate which rules apply to them, and what their online shops must comply with. (This part is not something we can do for you; it depends upon where you are, what goods you sell in what way – and we are software developers providing flexible tools to be appropriately deployed, not tax lawyers or hired consultants).

In order to help users comply with their rules, the plugin has been audited, and changes made, and new settings introduced, to enable sellers in the EU, or in the UK, or overlapping both, or in neither (but selling to one, the other, or both) to comply with their requirements. In addition, in many places, the wording of settings or other elements has been changed in order to reflect distinctions that didn’t exist before (particularly that the VAT area(s) you are interested in may not be solely identical with “the EU” or the EU VAT area). Moreover, after the end of December, the EU’s VIES system for looking up and validating VAT numbers will no longer process UK VAT numbers – this will return an error. As such, it has been necessary to code a new integration with the UK tax authority (HMRC)’s system – which requires your business to be registered and have an HMRC account, which is not necessarily an instant process. (Note that many users will have no need to look up UK VAT numbers; if in the UK and selling to the UK, normally VAT is chargeable; if outside the UK and selling to the UK, it may not be, depending on what sort of goods you are selling and to which part of the UK).

What this means in practice is that after ascertaining with the relevant authorities and your own advisors what end result you need to achieve, you will then want to update the plugin to the latest version (you should not assume that any previous version has all necessary changes or fixes to any issues found since they were implemented) go through the plugin’s settings and make sure that existing and new settings are all set appropriately – and that, if necessary, you have authorised with HMRC to look up UK VAT numbers.

Perhaps the most important new setting is the “VAT region”, identifying which VAT regions you are taking part in. This defaults to the status quo of “EU VAT region”. If you choose this setting, then this will automatically drop the UK VAT region out after the end of December. Alternatively, you can choose the UK VAT region or a combined EU + UK VAT region, both of which will contain these, and only these, countries without change. i.e. The word “currently” in the setting means “at whatever time ‘now’ happens to be at any current or future instant” (not “the time when you saved the setting”).

VAT region setting

You will also want to review the wording of any messages you are showing on invoices that are saved in your settings, as mentions of “the EU” may henceforth be too specific, or even incorrect. Even if you are using default settings, these will not be automatically updated to some other default – you need to review them manually.

If you need to set up HMRC lookups, then this can be done in a new settings section, which also allows testing:

VAT number lookups

Note that, though both systems (VIES and HMRC) can be used to perform actual look-ups, the plugin will not attempt to use the HMRC system at the checkout until January 1st (i.e. will prefer VIES). If you wish to override this, you can define the constant WC_EU_VAT_ENABLE_HMRC_LOOKUPS to true in your wp-config.php file.

The “Reports” section in the plugin will continue to list VAT charged to any EU or UK territory, on the theory that if you’ve charged the VAT, then presumably you didn’t want it hidden in the reports. (You are, of course, free to use or ignore any reported information as best fits your situation).

We always advise our users to test important changes. If you do not have a development/staging version of your site, then this is easy to do by installing UpdraftPlus and using the UpdraftClone system to create an instant clone of your site. It is not free, but is an excellent time and labour-saving investment.

Finally, if you need support, it is available – (or, for the free version of the plugin, here)! Please remember that the Christmas holidays are almost here: please report issues early, and exercise patience if, as is very likely for much of that period, there is no immediate reply. Rest assured that we will be working hard to make sure everyone can be ready for January the 1st, as we have been doing throughout the year to move many of these needed changes into place.