Readers may be interested in comprehensive guidance recently issued by HMRC, just in case we fall over the hard Brexit cliff on 29 March 2019. The following commentary on the position of UK importers will be included in our printed news copy for our clients next month:
Presently, the UK and the EU are singing from the same hymn sheet as far as VAT is concerned, but it is unlikely, that come 29 March 2019 (and even if there is a hard Brexit), the UK will abandon VAT – it brings in a sizeable slice of the UK’s tax revenue.
In fact, the present UK/EU VAT legislation is enshrined in a UK Act of Parliament.
But there has been press commentary recently about the effect on UK importers of EU goods, who post Brexit, may be required to pay duties or VAT in order to secure delivery. At present, there is free movement of goods.
Recently, HMRC have published a number of guidance documents that aim to enlighten UK businesses on what they can expect if we have a hard Brexit.
This is what they have to say about accounting for import VAT on goods imported into the UK from the EU:
If the UK leaves the EU without an agreement, the government will introduce postponed accounting for import VAT on goods brought into the UK. This means that UK VAT registered businesses importing goods to the UK will be able to account for import VAT on their VAT return, rather than paying import VAT on or soon after the time that the goods arrive at the UK border. This will apply both to imports from the EU and non-EU countries.
In reaching this decision, the government has taken account of the views of businesses and sought to mitigate any adverse cash-flow impacts keeping VAT processes as close as possible to what they are now. To ensure equity of treatment, in a no deal scenario, businesses importing goods will be able to account for their import VAT from non-EU countries in the same way, which will help UK businesses make the most of trading opportunities around the world.
This announcement will go some way to placate UK businesses that make frequent purchases from EU suppliers. It would appear that the proposed “postponed accounting” will at least defer any import VAT payable.
For businesses that have wider concerns about the effects of a hard Brexit, the full guidance from HMRC can be found here: