The government has published a series of technical papers providing guidance to businesses in the event of a ‘no deal’ scenario when the UK leaves the EU on 29 March 2019.
The government has published a series of technical papers providing guidance to businesses in the event of a ‘no deal’ scenario when the UK leaves the EU on 29 March 2019.
HMRC has published VAT for businesses if there’s no Brexit deal, setting out how VAT rules for UK businesses trading with EU countries would be affected. The government’s aim will be to keep VAT procedures as close as possible to what they are now, but the guidance details potential changes that would affect businesses in the following areas.
Importing goods from the EU: Changes will include the introduction of ‘postponed’ accounting for import VAT through the VAT return; removal of low value consignment relief for parcels arriving in the UK sent by overseas businesses; and application of import VAT to vehicles brought into the UK from EU member states.
Exporting goods to the EU: Businesses will be able to zero-rate sales of goods to EU consumers following disapplication of the distance selling rules; zero-rating will depend on UK businesses retaining evidence to prove that goods exported to EU businesses have left the UK, once the requirement to complete EC sales lists is removed; and current rest of world rules will apply to the temporary storage of goods exported to an EU member state.
Supplying services to the EU: Input VAT deduction rules for financial services supplied to the EU are expected to change; access to the EU tour operators margin scheme will cease; and UK businesses will no longer be able to use the UK’s VAT mini one-stop-shop (MOSS) for supplies of digital services to non-business customers in the EU.
Interacting with EU VAT IT systems: Businesses selling digital services to consumers in other EU member states will need to register for the VAT MOSS non-union scheme; access to the EU VAT refund system will cease; and access to the EU VAT number validation service will continue, albeit without UK VAT registration numbers being part of this service.
Daniel Lyons, head of the tax policy group at Deloitte, said the announcement that postponed accounting for import VAT would apply both to imports from the EU and the rest of the world was as expected. Although low value consignment relief would no longer apply to parcels with a value of £15 or less, Lyons noted that: ‘There will however be a new, innovative “technology based solution” so that overseas businesses sending parcels into the UK with a value of £135 or less will be able to account for VAT online at the point of purchase.’
Lyons also noted that UK businesses would no longer be able to use the EU VAT refund system (the ‘portal’) and as a result would have to use the same process as non-EU members. ‘This process is thought to be slower and more inconvenient than the fast track EU portal service,’ Lyons said.
Another HMRC paper, Classifying your goods in the UK Trade Tariff if there’s no Brexit deal, deals with how businesses would need to apply the EU’s common customs tariff (CCT) to goods exported to the EU, with the UK requiring payment of customs duty on imported goods at rates the government will set. See https://bit.ly/2BEVS4G.
This should be read alongside Trading with the EU if there’s no Brexit deal (https://bit.ly/2o57nJ0), which covers matters including what would happen to customs and excise procedures in the event of ‘no deal’, focusing in particular on registering for an economic operator registration and identification (EORI) number.
BEIS has published State aid if there’s no Brexit deal, which explains how the UK will apply state aid rules, noting that the UK ‘strongly supports a rigorous state aid system’. The government will create a UK-wide subsidy control framework administered by the Competition and Markets Authority to ensure the continuing control of anti-competitive subsidies. EU state aid rules will be transposed into UK domestic legislation for all sectors under the European Union (Withdrawal) Act. Existing approvals of state aid, including block exemption approvals, will remain valid and will be carried over into UK law. See https://bit.ly/2LjPuPZ.
The chancellor of the exchequer Philip Hammond has written to the chair of the Treasury Committee, Nicky Morgan, responding to questions about the government’s ‘no deal’ Brexit planning and analysis. The letter confirms the Treasury’s estimate that ‘no deal’ would increase the government’s annual borrowing requirement by around £80bn by 2033/34. It also states the Treasury’s view that a ‘no deal’/WTO scenario would cause UK GDP to be 7.7% lower over the same 15 year period following the UK’s exit than under the current EU relationship (see https://bit.ly/2MFmacb).
The government has published a series of technical papers providing guidance to businesses in the event of a ‘no deal’ scenario when the UK leaves the EU on 29 March 2019.
The government has published a series of technical papers providing guidance to businesses in the event of a ‘no deal’ scenario when the UK leaves the EU on 29 March 2019.
HMRC has published VAT for businesses if there’s no Brexit deal, setting out how VAT rules for UK businesses trading with EU countries would be affected. The government’s aim will be to keep VAT procedures as close as possible to what they are now, but the guidance details potential changes that would affect businesses in the following areas.
Importing goods from the EU: Changes will include the introduction of ‘postponed’ accounting for import VAT through the VAT return; removal of low value consignment relief for parcels arriving in the UK sent by overseas businesses; and application of import VAT to vehicles brought into the UK from EU member states.
Exporting goods to the EU: Businesses will be able to zero-rate sales of goods to EU consumers following disapplication of the distance selling rules; zero-rating will depend on UK businesses retaining evidence to prove that goods exported to EU businesses have left the UK, once the requirement to complete EC sales lists is removed; and current rest of world rules will apply to the temporary storage of goods exported to an EU member state.
Supplying services to the EU: Input VAT deduction rules for financial services supplied to the EU are expected to change; access to the EU tour operators margin scheme will cease; and UK businesses will no longer be able to use the UK’s VAT mini one-stop-shop (MOSS) for supplies of digital services to non-business customers in the EU.
Interacting with EU VAT IT systems: Businesses selling digital services to consumers in other EU member states will need to register for the VAT MOSS non-union scheme; access to the EU VAT refund system will cease; and access to the EU VAT number validation service will continue, albeit without UK VAT registration numbers being part of this service.
Daniel Lyons, head of the tax policy group at Deloitte, said the announcement that postponed accounting for import VAT would apply both to imports from the EU and the rest of the world was as expected. Although low value consignment relief would no longer apply to parcels with a value of £15 or less, Lyons noted that: ‘There will however be a new, innovative “technology based solution” so that overseas businesses sending parcels into the UK with a value of £135 or less will be able to account for VAT online at the point of purchase.’
Lyons also noted that UK businesses would no longer be able to use the EU VAT refund system (the ‘portal’) and as a result would have to use the same process as non-EU members. ‘This process is thought to be slower and more inconvenient than the fast track EU portal service,’ Lyons said.
Another HMRC paper, Classifying your goods in the UK Trade Tariff if there’s no Brexit deal, deals with how businesses would need to apply the EU’s common customs tariff (CCT) to goods exported to the EU, with the UK requiring payment of customs duty on imported goods at rates the government will set. See https://bit.ly/2BEVS4G.
This should be read alongside Trading with the EU if there’s no Brexit deal (https://bit.ly/2o57nJ0), which covers matters including what would happen to customs and excise procedures in the event of ‘no deal’, focusing in particular on registering for an economic operator registration and identification (EORI) number.
BEIS has published State aid if there’s no Brexit deal, which explains how the UK will apply state aid rules, noting that the UK ‘strongly supports a rigorous state aid system’. The government will create a UK-wide subsidy control framework administered by the Competition and Markets Authority to ensure the continuing control of anti-competitive subsidies. EU state aid rules will be transposed into UK domestic legislation for all sectors under the European Union (Withdrawal) Act. Existing approvals of state aid, including block exemption approvals, will remain valid and will be carried over into UK law. See https://bit.ly/2LjPuPZ.
The chancellor of the exchequer Philip Hammond has written to the chair of the Treasury Committee, Nicky Morgan, responding to questions about the government’s ‘no deal’ Brexit planning and analysis. The letter confirms the Treasury’s estimate that ‘no deal’ would increase the government’s annual borrowing requirement by around £80bn by 2033/34. It also states the Treasury’s view that a ‘no deal’/WTO scenario would cause UK GDP to be 7.7% lower over the same 15 year period following the UK’s exit than under the current EU relationship (see https://bit.ly/2MFmacb).
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