UK-Implications of a 'no-deal' Brexit
Following the referendum in 2016, the UK is due to leave the EU on 29 March 2019. Currently no formal exit deal has been reachedbetween the UK, and the UK has today released a guidance note outlining some key matters concerning VAT should no deal be in place on the day of exit.
Some of the key features of this guidance are:
-Postponed accounting will be introduced for import VAT, meaning VAT will be paid and recovered simultaneously upon the UK VAT return
-There will be no low value consignment relief for goods coming from EU-UK
-Where parcels have a value up to £135, the seller is responsible for payment of VAT and must register and pay through a new HMRC digital service
-The distance selling rules for B2C intra-EU sales will no longer apply
-EC sales list completion will no longer be a requirement
-For services, the existing place of supply rules will remain
-There may be increased input tax recovery for businesses selling financial services as these will be now not be made within the EU
-UK businesses selling broadcasting, telecom, or e-services to private customers will need to use the non-Union MOSS scheme
-13th directive claims will need to be submitted where overseas VAT is incurred and no local VAT registration is in place
-The VIES EU VAT number validator will still be accessible for UK businesses but will not contain UK numbers (although software may be introduced allowing this)
Currently, there is expected to be a transition period from the date of leaving until 31 December 2020, within which existing rules will apply, however this could change.