Brexit and VAT Updates

Brexit and VAT Updates

Rayner Essex VAT Director Jason CrokeJason Croke, VAT Director, has put together the latest Brexit and VAT updates to help you understand exactly what they mean for you and your business.




As we approach the end of the year, it is perhaps a good time to start a conversation, once more, on the topic of Brexit.


It is important to appreciate that, although negotiations continue apace between the UK and EU, the situation regarding VAT is already known.  The media coverage of deal or no deal relate to import duties and technical matters such as which courts to settle disputes in and state aid rules.  But for VAT and how we buy and sell goods and services into and from the EU, that is not going to change.


Therefore, it is important businesses perform a “Brexit Audit” to see if the changes will impact their business, be it by supply chain or end consumers.  There is plenty of time to implement any changes that are required as the UK has offered a number of temporary rules to ease the impact on the first day of the new year and beyond.


The main changes that businesses may witness are as follows :-


  • Businesses that import goods from EU countries will face additional reporting requirements, but with full import declarations not required until 1 July 2021.  Import VAT will be declared on the taxpayers VAT return, much the same way as we reverse charge at present.


  • Import duty will be payable at the UK border but will be deferred until the full declaration is submitted (up to 1 July 2021) – this is like the VAT deferral we had for Covid19, import duty is charged but the taxpayer has 6 months to settle the bill.


  • So, for the first 6 months, import duty due is postponed and import VAT is not paid at all/dealt with via the VAT return.


  • After the 6 months postponed period, duty will be payable upon arrival into the UK, so you need to consider if you want a HMRC deferral account (which requires a bank guarantee and delays payment, depends upon the volumes and frequency of goods being imported.


  • From 1 April 2021, products of animal origin (food, etc) and plants will need pre-notifications and health certificates. This aspect may be affected by the EU negotiations/deal scenario but plan for there being either no deal, or a deal but certificates may still required.


  • From 1 July 2021, all goods will be subject to Customs checks when entering GB.


  • Movements of goods from GB to Northern Ireland are not yet fully finalised and the EU negotiations/deal scenario will determine what happens next.


  • A new “UK global tariff” will apply new import duty rates to all imported goods, whether those goods are coming from the EU or the rest of the world.  Plan on the basis these duty rates will apply, and you will need to know the commodity codes for each item you are importing from the EU/non-EU to ensure the correct rate of duty is applied.


  • Import duty means goods arriving into the UK from anywhere, may see a duty of 0% or more added to the cost of the goods, this is not recoverable and becomes part of the cost of acquiring the goods, VAT is also charged but that is recoverable if the importer is VAT registered.


  • Many of the “UK global tariff” duty rates are nil or lower than the rates the UK currently uses (the current rates are set by the EU).  This may mean goods from outside the EU will have lower duty rates than present, but goods from EU which were previously duty free, may now have duty applied to them, depending upon the goods.


  • If selling goods to EU consumers (B2C) expect full customs procedures at consumers end, consumers may have to pay import duty and import VAT on those goods.


  • If you operate MOSS (Mini One Stop Shop) then you will need to deregister for MOSS as that is only for EU businesses and UK is no longer an EU Country, you would then need to re-register for MOSS in an EU Country (e.g., Ireland) and continue to declare VAT on sales to individual consumers.  There is no threshold for MOSS post Brexit.


  • Online sellers selling to consumers would normally charge UK VAT or distance selling rules trigger an EU VAT registration, post Brexit, e-retailers will zero rate their exports to EU customers but the customer will then risk being hit with import duty/import VAT upon the goods arriving in the customers country.  If you’ve ever bought something off eBay from China, you will know you sometimes receive the goods no problem or you get a postcard from Royal Mail asking you to pay duty and taxes, this will be the experience for EU consumers, this may dissuade consumers from buying from the UK or may require registering for VAT in the destination Country to provide a smoother customer experience.


  • No more EC Sales Lists (ECSL).  Intrastat reports will still be required by HMRC though.


  • Sales of services are unlikely to change from the current rules, so a supply of management consultancy from a UK business to a German business will be outside the scope of VAT.


  • EU Refunds (where a UK business incurs EU VAT and can reclaim it), the online claiming method (8th Directive) ceases from 31 March 2021, so clients should get their claims in before this deadline.  After that deadline, claims can still be made (13th Directive) but must be done manually, using the forms of the member state (i.e., foreign language).


To discuss any of these points in more detail please contact Jason Croke or fill out the contact form below and we will get back to you.

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