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Brexit’s Impact on UK VAT

Brexit’s Impact on UK VAT

Brexit’s Impact on UK VAT

Most people say that, whatever the outcome of Brexit, the most important thing to consider is the European trade. Naturally, this statement comes from business owners – be they large or small – who are worried about the new VAT rules that may take quite a toll on their business’ cash flow.

It goes without saying that Brexit will have an impact on the UK VAT – the question is, how serious will the impact be?

Luckily, we are here to show you what happens after the UK leaves the EU in terms of VAT, as well as some new regulations that the country must do to minimize Brexit’s impact on VAT.

 

Brexit’s Impact on UK VAT

 

Fiscal Representation

Any UK-based businesses that are registered for VAT in any EU country will have to appoint a special Fiscal Representative in that country – if the country imposes such a requirement for non-EU businesses.

However, a couple of tax authorities – Spain, Belgium – have advised that the UK businesses that wish to work with them should appoint a Fiscal Representative before their country leaves the EU.

 

The EORI Number

The UK-based businesses will have to apply for an EORI number in the event of a hard Brexit if they want to import goods in the UK. 

On the other hand, if they want to export goods to the EU, they will need a GB EORI number.

 

Import of Goods Into the UK

B2C and B2B businesses will need to consider parcels below 135 pounds, postponed accounting for import VAT, low-value consignment relief, as well as entry summary declarations after Brexit.

All the above affect the import of goods into the UK.

 

 

Brexit’s Impact on UK VAT

Export of Goods from the UK

When it comes to export, B2B goods supplies may be zero-rates in the UK – but keep in mind that you’ll have to see if any complications may affect the exported when the goods are being imported into the EU.

As such, incoterms should be reviewed as soon as possible.

For B2C goods supplies, these can be zero-rated as well. However, business owners will have to take into account the customer acts as importer, business acts as importer, and business holds stock within the EU as well. 

 

Import of Goods into the EU

Any UK-based business that will import goods into the EU must take into consideration the customs declarations, payment of import VAT, EORI, and the VAT fiscal representation and registration. 

 

Intra-EU Goods Supplies

After Brexit, the UK will no longer be able to use the triangulation simplification provided by the EU. However, if the supplier has another EU VAT number, this method may still be used.

 

VAT Refund

In terms of VAT refund, UK businesses that incur EU VAT will have to make claims for the VAT incurred in 2018, but before the UK leaves the EU.

On the other hand, EU businesses that incur UK VAT will have to make claims for the past year before the UK leaves the EU, mainly because the Refund Directive portal won’t be available anymore.

 

The Bottom Line

In short, after Brexit happens, if you are a business owner, you will calculate VAT on your invoices using the 13th Directive scheme – not the 8th, as you used to. The 8th, as you remember, is a digital directive – unlike the 13th, which is paper-based and implies that you’ll have to file VAT claims and such.

It goes without saying that businesses may have a hard time dealing with all of the above – but will surely find it difficult to adapt to these changes!

 

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