HMRC update guidance on VAT in the event of a no-deal Brexit

HM Revenue and Customs (“HMRC”) have published a great number of documents to assist businesses in the event of a no-deal Brexit.

In respect of VAT, the guidance states that the Government will aim to keep the treatment of VAT as close to the current system as possible.  It aims to provide continuity and certainty for businesses.

However, if the UK leaves the EU with no agreement, there will be a number of specific changes to the VAT rules and procedures that apply to transactions between the UK and EU member states.

For example, in a no-deal Brexit scenario, the Government will introduce postponed accounting for import VAT on goods brought into the UK. This will mean that UK VAT registered businesses importing goods to the UK will be able to account for import VAT on their VAT return, and not have to pay import VAT on or soon after the time that the goods arrive at the UK border.

This importantly will apply both to imports from the EU and also non-EU countries.

Meanwhile, distance selling arrangements will no longer apply to UK businesses, and UK businesses will be able to zero-rate sales of goods to EU consumers.  Depending on who is treated as the importer it may be that the UK business needs to account for EU VAT and Duty to enable the goods to enter the EU.

There are several other situations, which we will explore in more detail over the coming weeks.

Julian Borley, Director of VAT at Milsted Langdon, said: “The guidance published by HMRC is useful for businesses in the event of a no-deal Brexit.  It is recommended that businesses consider the guidance provided by HMRC to ensure that their trade with the EU is not unduly interrupted.

Posted in Blog, VAT.