Regardless of whether the UK manages to secure a deal with the EU, following Brexit on 31 December 2020, importers and exporters will have to make changes to their current VAT and Customs processes. With limited time available, businesses should now be considering what they need to do to ensure a smooth movement of goods across borders.
Although much of the detail has yet to be confirmed, what we do know is that the UK will become a third country and all cross-border movements of goods will become imports and exports. The rules for importing and exporting certain types of products will change.
All businesses will need an EORI number starting with “GB”.
The current Customs tariff will be replaced by the UK Global Tariff. Businesses should be checking what rates of duty will apply under the UK Global Tariff. To do this they will need the commodity code or description of goods.
For imports, payment of VAT will move from the border to the VAT returns under the postponed accounting scheme. This means import VAT is no longer declared and paid up front at the point of entry of the goods into the UK. Instead import VAT is accounted for on UK VAT returns which may give rise to a significant cash flow benefit.
There may be changes needed to current EU VAT registrations due to the loss of current EU reliefs such as Triangulation, distance selling rules etc.
New rules will be implemented for overseas sellers of goods into the UK, including online marketplaces facilitating the sale of in the UK. The current low value import relief will be abolished along with the Retail Export Scheme.
EU MOSS for Business to Consumer (B2C) supplies of digital services will no longer be available. Businesses will need to consider the alternative options.
We recommend that now is the time for businesses to review their supply chains and business models and take advice where appropriate.
If you would like to discuss this matter further, please contact Mercer & Hole’s VAT Director, Jane Stacey.