Brexit: what businesses need to know
The UK officially leaves the European Union today at 23:00 GMT. We have put together a list of 15 VAT and Duty issues that will impact businesses in 2020 and beyond.
- The UK enters a transitional period which ends on 31 December 2020.
- Existing intra-EU VAT and Duty rules will apply throughout the transitional period – so it’s business as usual for now.
- Businesses will continue to complete ESL’s and Intrastat to report their EU transactions.
- Simplifications and special procedures such as Triangulation, margin schemes, MOSS and intra-EU VAT recovery via the portal will remain for this period.
- There will be no customs duty tariffs imposed on intra-EU goods during this period.
- The No-Deal emergency measures which were announced last year to deal with Brexit 2 (October 19) will be mothballed for now. HMRC auto-enrolled thousands of UK businesses in October 19.
- The amendment to the Brexit Bill to prohibit the extension of the transitional period raises the potential risk of a No-Deal at the end of 2020.
- Most observers agree that 11 months to negotiate and finalise a Free Trade Agreement is wildly optimistic and without the ability to extend, No-Deal does not disappear.
- In the meantime, those signed up to the TSP (transitional simplified procedures) measures implemented by HMRC to make imports into the UK easier for the first year, should keep these on file in case No-Deal raises its head again.
- We remain within the Customs Union during the period. We recommend that businesses in manufacturing, food, motor and those with parent or subsidiary companies based in either the EU or in Northern Ireland start planning for 2021. Customs warehousing, IPR/OPR and AEO are complex applications with a long lead in time. These regimes will be all important once we leave the EU in mitigating Customs Duty exposure. It takes up to 120 days to secure a Duty Deferment Account with a customs guarantee. 3 months will fly by.
- In September 2020 HMRC is due to fully launch its new customs declaration system, CDS, which will involve sweeping changes to the way import and export declarations are made. This will impact all importers and exporters due to the extensive changes imposed under the new system. This should be factored into any customs planning to ensure a business can transition effectively.
- From 1 January 2021 businesses trading intra-EU will have an increased involvement in the international supply chain. All imports and exports in and out of the UK will be subject to customs declarations and added controls.
- At the same time, there are major VAT changes being introduced in the EU on 1 January 2020. UK businesses need to be aware and take care to be compliant. In particular those businesses who are registered for VAT in the EU will need to implement the changes and we can help you with this. Click here to read our article about the 2020 changes.
- Even more VAT changes come into effect in 2021. UK businesses supplying goods and services directly to consumers established within the EU will need to consider their EU VAT obligations very carefully. UK businesses will need to, register for the non-Union MOSS scheme; consider appointing a tax representative established within the EU and comply with reporting obligations in the Member State.
- The UK exit from the European Union is likely to cause significant changes to UK businesses’ VAT accounting obligations. Affected businesses need to get to grips with these changes as soon as possible.
Download the information above in our Brexit Update info sheet.Read our Brexit fact sheet
How we can help
We can help you turn Brexit to your advantage. For further advice on how to use the above measures into a strategic expansion for your business, please get in touch with a member of our team.