VAT News

UK-VAT area post-Brexit

With the UK due to leave the EU in March 2019, one of the undecided issues is which VAT rules will be applicable following departure. Currently the UK VAT law is derived from the principal EU VAT directive, and all disputes fall under the jurisdiction of the European Court of Justice, however following Brexit the UK would be able to decide its own VAT legislation in isolation.

Recently however, there have been media reports which suggest that the UK will remain within the EU VAT area post-Brexit and will continue to be bound by EU rules. Indeed the UK government has previously stated that they wish to keep VAT processes closely aligned to EU. The same media reports suggest that the UK has been playing a role in determining new EU VAT regulations for the 2020's.

Should this happen, it would seem to cross one of the red lines outlined by UK prime minister Theresa May.

It should be noted that the VAT area is distinct from the customs area and single market.

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