The latest noises coming from the EU are suggesting that a no-deal Brexit is looking more and more likely. The full ramifications of that will only be seen over a long period of time, but the immediate concern for many UK businesses will be what does this mean for the movement of goods to and from the UK from EU countries after 29 March 2019?
HMRC sent a letter to many affected VAT registered businesses last week providing advice to prepare for this so-called no-deal Brexit environment. It seems that businesses should pay very careful attention to the contents of this letter and plan accordingly.
Some points to extrapolate from the HMRC letter:
- If you already have procedures in place for trading with non-EU countries, expect to have to extend these procedures for trading with EU countries. Does this mean greater staff resources are required?
- If you don’t have such procedures in place, decide on whether you are going to deal with import/export yourselves or appoint an agent to deal with this. If the latter, get on with appointing an agent because they are going to become a scarce resource
- If dealing with import/export in house, research appropriate software to put in place
- Imports from EU countries will be subject to the same import VAT procedures as we currently see with non-EU countries, i.e. import VAT chargeable on entry to the UK, but with a deferral process available. This means that importers from EU countries that don’t already have a deferment account set-up will need to apply for one. There could be an almighty scrum for dealing with such applications come next April, so taking steps early may be a sensible option. This process requires a bank guarantee or insurance cover, so it is not a simple button pressing exercise
- Traders dealing in electronic supplies are going to need to register for VAT MOSS in EU countries in which they do business
For more information please contact Corporate Tax Partner, Brian Jukes.