The UK has taken advantage of a variety of compliance simplifications as a result of being members of the EU VAT regime, Customs Union and Single Market. So, as we cease to be members after 31st December 2020, does this mean that cross border is now going to be more complicated?
Potentially so. Therefore it’s important to be as prepared as possible ahead of the deadline. A good place to start is to get your internal systems ready now to address the changes to customs declarations, checks and potentially tariffs that will be introduced.
One of the key points to make at the moment is that many of the issues businesses are going to face post 31st December are already known certainties, whether we get a trade deal with the EU or not. A case in point being the UK will be an export location from the EU’s perspective and vice versa. Import and export procedures is an area many businesses are well versed in, however, for those who trade primarily with EU countries, things are about to change and alternative processes will need to be adopted.
It is impossible to summarise all the changes that will take place within this article. But we know that we will be adopting the B2B and B2C general rules for services, so many of the VAT implications of selling services will remain the same, at least initially. There are many complexities within the place of supply of services rules though, so businesses will need to ensure they are not caught by one of the exceptions.
Recent conversations we’ve had with our clients have also included assistance with how changes get reported through accounting systems, in particular those organisations with bespoke or non-standard software. Getting new reports out of the system for the appropriate VAT reporting will be a critical step.