I have been trying to avoid using the ‘B’ word for some time…Brexit. I know, I know – if you are anything like me you are sick to the back teeth of hearing about it. At the time of writing we are just under seven months away from ‘B-Day’ and yet most of us have no idea what the landscape is going to look like.
I’m not going to get political or hypothesise about what might be, because I don’t believe anyone wants to hear that. However just recently the ‘Department for Exiting the European Union’ have published 25 guides on how to prepare if the UK leaves the EU with no deal, with further to follow later in September. There do make it clear that this is very much contingency planning and not indicative of the way negotiations are progressing.
The guides published thus far cover a variety of topics, from EU funding and nuclear research, to studying in the UK or EU and workplace rights. Two which have been of particular interest so far, as I have not yet read them all, relate to VAT and trading with the EU.
The bad news, VAT is here to stay. This is unlikely to be a surprise to many. For businesses which trade with the EU, there would be some substantial changes, but they are not all as bad as you might think. A postponement system for the payment of input VAT on imported goods for example, will allow importers to account for UK VAT on their VAT returns as they do with EU acquisitions currently, except this will also be extended to non-EU imports, which is nice.
For exporters, things could be a little trickier as VAT would be due on arrival into an EU country and the rules could vary from state to state. EC Sales lists would be a thing of the past however. The general rules around the place of supply of services will be broadly unaffected, but users of the MOSS system for certain digital services may need to register for VAT in another EU Member State to continue to benefit from it.
Customs duties are likely to become more complex, with duties potentially payable on both imports from and exports to the EU as they are with countries outside of the EU. Businesses would likely need to register as an importer with HMRC if they are buying goods from another EU country.
While it isn’t particularly pleasant reading in some cases, it is the first formal indication of what the future could look like, if no deal is reached. For businesses who trade with the EU, now is the time to start your own contingency planning.
This article originally appeared in the October/November edition of Wiltshire Business.