Most people spend longer planning a wedding that UK businesses are being given to plan for Brexit. Probably an odd thought given that this is a national divorce but nevertheless we are in a worrying situation. How ‘no deal’ Brexit will work has been a real worry for a while. Welcome then comes some real information published today by HMRC about how the rules will work next March if we end up leaving the EU without an agreement.
We now know for sure that the UK will continue to have a VAT system and nothing will change for supplies taking place within the UK so that’s nice and easy.
Also reassuring is the stated aim of keeping the UK’s VAT rules and procedures as close as possible to what they are now. However something will need to change for sales and purchases between the UK and the EU and the current thinking is that –
Imports from EU suppliers will largely be treated the same as non-EU imports but more good news here. New ‘postponed accounting’ rules will be introduced so that UK VAT registered businesses account for import VAT on their VAT return instead of having to actually pay import VAT when the goods come into the UK. Better yet, except for parcels and vehicles, the same procedure will also be extended to imports from non-EU countries so this sounds all very nice and easy.
Exports from the UK will still be zero rated (subject to shipment evidence) but extended to include B2C sales of goods to EU consumers – so the good news here is that we lose both EC sales lists and the onerous distance selling obligations. However in place of the EC sales lists expect a change to how sales into the EU are recorded.
Place of supply rules will broadly remain unchanged. VAT will be due from UK businesses supplying digital services to EU non-business customers in the EU member state where the customer resides so this will continue to need careful management. In place of the current MOSS system UK businesses will need to re-register but under the VAT MOSS Non-Union scheme but only after the UK has left the EU.
You can read more here about How ‘no deal’ Brexit will work – https://www.gov.uk/government/publications/vat-for-businesses-if-theres-no-brexit-deal/vat-for-businesses-if-theres-no-brexit-deal#before-29-march-2019
If you’re ever not sure about VAT related then please give us a call. Remember sooner is always better.