VAT and Brexit: Implications for you

Obviously Brexit has been the most often discussed topic in this country over the last few years, and especially this month, with the expected date of 31st October going ahead. Brexit creates a number of uncertainties for everyone, and one of them is the situation with taxes. Below we try to explain some basics how the firms and VAT they pay will be affected. It will be mainly dependant on the fact whether these are taxes defined in the EU legal framework or no.

Contact us if you want to learn more about specific aspects of it.

VAT is subject to total harmonisation in the EU and feeds into the EU budgets, so most Brexit scenarios will affect it. In case of no-deal Brexit, the UK companies cannot access a range of tools and measures used previously, such as

  • The EU Mini One Stop Shop (MOSS) portal to report and pay VAT on sales of services – and goods to private consumers in the EU
  • The foreign VAT reclaim procedures within the EU that use electronic portals. (This means that the UK companies will need to use another VAT reclaim procedure and we’re happy to support you if you need any help in this area)
  • Several simplification measures, for example, the ones for chain supplies etc.

Low value consignment relief (LVCR) would also be affected, meaning that packages below £135 sent into the UK would be subject to import VAT.

In case of no-deal, UK businesses should register for VAT through a representative in the EU.

While postponed accounting will be introduced for some of the UK businesses so VAT can be included in their next return, for many businesses it is a confusing and uncertain period and we are only happy to guide you through potential effects of various Brexit scenarios.