Brexit Update for VAT – December 2019

Rayner Essex Brexit update, all you need to know to be prepared.

Now the elections have concluded, with a Conservative majority, it is inevitable that Prime Minister Boris Johnson will continue with his “Get Brexit Done” mantra and continue with the pre-election Withdrawal Agreement.  This means we will exit the European Union on 31^st January 2020 with an implementation period ending 31^st December 2020, giving the UK a year to negotiate future trade agreements with the EU/rest of the world.

From a VAT/Customs perspective, it is worth revisiting the changes leaving the EU will have for businesses:-

Distance selling thresholds.

For UK based online retailers selling to EU consumers (and vice versa), the impact will be a requirement to register for VAT in EU Countries /UK and intra-EU goods will be subject to import VAT which may upset consumers having to pay extra at the post office to receive their products.

MOSS (Mini One Stop Shop).

For traders registered with MOSS, a scheme for selling digital content direct to consumers, they will have to deregister for MOSS in the UK and register for MOSS in an EU member state in order to continue to comply with the legislation on digital downloads/sales.

EU Refund, via the HMRC website will cease. If you have incurred EU VAT (travel, hotels) which cannot be reclaimed on a UK VAT return, submit your EU refund claim via the HMRC urgently.  Post Brexit, EU VAT is still recoverable but will require direct correspondence with the member states tax office, in their respective language on paper forms.

The simplification of zero-rating goods between VAT registered EU member states will end, sales will be imports/exports and subject to VAT in Country in which the goods arrive.  Triangulation simplification is also affected.  No more EC Sales Lists but HMRC have stated they will still require Intrastat returns where the thresholds for that scheme are met.

Don’t forget to request an EORI number from HMRC if not already got one.

Customs Duty will technically apply to all EU goods entering the UK. Around 88% of goods will be Nil duty post Brexit but thereafter is uncertain and import duty codes will become more important to ensure correct duty rates, something which was not hugely relevant with Intra-EU trading.

More details from our September update can be found here.

Should any of the matters above directly affect your business and you feel that advice would be helpful then please get in touch and discuss with our VAT and Duty specialist, Jason Croke, who can explain the impact Brexit will have on your business and can also assist in guiding your business to Brexit preparedness.