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VAT for business with a No-Deal Brexit

POSTED BY: Scott Sartin

06 August 19

With the new Prime Minister, Boris Johnson appearing to take an increasingly hard-line, the chances of Britain leaving the EU without any working agreement, known as a ‘no deal’ Brexit is looking increasing likely and certainly cannot be ignored.

If the UK leaves the EU on 31 October 2019, without a deal, there would be immediate changes to the procedures that apply to businesses trading with the EU. It would be timely to repeat a summary of the VAT guidance published by HMRC reminding businesses how to prepare.

Listed below are some of the main VAT issues that will affect UK businesses trading with the EU in goods and services if the UK leaves the EU without an agreement.

Imports

Businesses that are importing goods from the EU would be required to follow customs procedures in the same way that they currently do when importing goods from a country outside the EU. This means that an import declaration would be required, customs checks and any customs duties due must be paid.

There would also be multiple VAT issues including the requirement to account for import VAT on goods coming from the EU. The Government has already confirmed that postponed accounting for import VAT on goods brought into the UK will be introduced if the UK leaves the EU without an agreement.

Exports

Any agreement in place businesses exporting goods to the EU, will be required to follow customs procedures in the same way that they currently do when exporting goods to a non-EU country.

VAT registered UK businesses will continue to zero-rate sales of goods to EU businesses and will no longer be required to complete EC sales lists. However, EU member states will treat goods entering the EU from the UK in the same way as goods entering from other non-EU countries with associated import VAT and customs duties due when the goods arrive into the EU.

A ‘no deal’ Brexit would also mean the end of special VAT ‘distance selling’ rules for the zero-rated sale of goods to EU consumers, as well as changes to the UK VAT Mini One Stop Shop rules.

We would advise any UK businesses trading with the EU to seriously consider what action will be required in the event of a ‘no deal’ Brexit and to prepare a carefully thought-out risk assessment.

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