Submitted by Sestini & Co
| on Tue, 12/10/2019 - 14:35 | In HMRC
The result of the general election on 12 December could
offer some more certainty over whether the UK will leave the EU and what the
shape of the ‘deal’ (if any) is. We currently know for sure that Brexit is
delayed until 31 January 2020. If the country does leave the EU with ‘no deal,
it will immediately exit the customs union and single market and would then
follow the World Trade Organization rules in its trade with the EU and other
Preparations for various scenarios are underway and as Britain’s
potential departure from the EU looms, various UK Statutory Instruments (laws)
are being updated.
One such is the regulation governing VAT for cross-border
Government advice recognises
that there may be a ‘no deal’ and says that if this happens, “the
government’s aim will be to keep VAT procedures as close as possible to what
they are now”.
Cooperation on tax
fraud would likely continue in similar vein to the current system.
Until a deal is
finalised – or ‘no deal’ is accepted – we cannot say with certainty what will
happen but in the event of a ‘no deal’, changes would likely need to be made
goods from the EU
goods to the EU
services to the EU
with the EU VAT IT systems including the VAT Mini One Stop Shop (MOSS)
Accounting for VAT on goods post Brexit
If there is a ‘no deal’, the government plans to
introduce ‘postponed accounting’ for import VAT on goods brought into the UK.
This will allow UK VAT registered businesses to pay import VAT when they pay
their VAT return, instead of when or soon after the goods arrive at the UK
border. This is potentially one of the most significant changes.
Under this scenario, businesses importing goods
from non EU countries would also be able account for their import VAT in this
Exporting goods to EU consumers and EU businesses post
In the event of a no deal, UK businesses selling
to EU consumers will be able to zero rate sales of goods and distance selling
arrangements will no longer apply.
For VAT registered
UK businesses selling to EU businesses, accounting will continue much as
currently, with sales of goods to EU businesses zero-rated.
However, there would
be no requirement to complete EC sales list. Instead, UK businesses exporting
goods to EU businesses will need to keep detailed and careful evidence to prove
that the goods have left the UK (to support zero-rating). This would be another significant change to
Exporting services to the EU post Brexit
VAT on UK services sold to the EU in a no deal
scenario will remain as-now with the main VAT ‘place of supply’ rules
There are already specific rules for those who
supply digital services to non-business customers in the EU, and those who
supply insurance and financial services. There may be some changes to the way
VAT is accounted for.
Setting up overseas
To make trade easier, one option for British companies post
Brexit would be to set up a legal entity as your presence in the EU, or to
enter into a serviced office agreement in the EU.
you’re considering what the ramifications of Brexit could be for your business
or would like help with any tax-related issues then come and speak to us, give
us a call on 01761 241 861 or email us today.
will be pleased to advise you or to invite you into our offices in Paulton,
near Bristol and Bath, for a consultation.