Brexit-UK government to impose VAT and customs duty if no deal can be reached
Following the 2016 Brexit vote, the UK will leave the European Union in March 2019. Currently, there is free movement of goods across the EU and goods arriving in the UK from other EU member states do not attract any customs duty or import VAT.
The UK authorities have recently released a 14 page document which outlines their plans for the movement of goods following the exit. Whilst confirming that the UK will leave the existing customs union, the document outlines the UK's desire to have a transition period where the current rules continue to apply, followed by a system which seeks to avoid customs processes and unnecessary burdens for businesses, indicating that a system with no import VAT or customs duty for goods arriving from the EU would be preferable.
However, the UK has indicated that if such a deal cannot be agreed upon by the time of exiting the European Union, an imposition of customs duty and import VAT on goods arriving from the EU would occur.
Such requirements could impact heavily on cashflow for businesses, and also provide an irrecoverable customs duty burden.