Our VAT and Indirect Tax expert Ruth Corkin has commented on the most notable points to come out of the recent government Brexit talks.
Whilst businesses come to terms with the world post the COVID-19 pandemic, the UK and EU have been working on “Brexit Mark Two”. Yesterday saw confirmation from both sides that the transition period will not be extended. Therefore, the UK really will leave the shadow of the EU on 1 January 2021 and businesses now have something else to prepare for.
How to prepare for Brexit
What does Brexit mean for businesses? Here is a summary of things to think about and prepare for in the last 6 months of 2020!
- Businesses that import goods from EU countries will face some additional reporting requirements, although full declarations are not required until 1 July 2021;
- Duty will technically be payable at the GB border but will be deferred until the full declaration is submitted (up to 1 July 2021);
- Controlled goods (e.g. alcohol, hydrocarbons, alcohol etc.) will be subject to customs checks, as will some high risk live animals and plants from 1 January 2021;
- From 1 April 2021, Products of Animal Origin and plants will need pre-notifications and health certificates;
- From 1 July 2021, all goods will be subject to Customs checks when entering GB;
- Movements of goods from GB to Northern Ireland (“NI”) will not need export or import declarations, unless they are at risk of being moved into the EU from NI. However, there will be a new reporting requirement for these goods, part of which may involve the current Box 8 on the VAT return;
- Import VAT may be due on goods entering the UK from anywhere in the world(but not on goods entering NI from mainland GB). This will be accounted for through the VAT returns under “postponed accounting”, using the current boxes on the VAT return for the EU acquisitions;
- The new UK tariff will apply. This is shorter than the current EU one and has been simplified in terms of duty rates;
- Exporters to the EU can expect full customs procedures on their goods when they reach their customer’s country;
- Suppliers of electronically supplied services using the current MOSS scheme must register for VAT in each member state where they have customers or register for MOSS in another member state for the non-Union scheme. A tax representative may be required, which is an added cost;
- Suppliers of certain financial services may have increased VAT recovery where the recipient or beneficiary is outside the UK, rather than outside the EU;
- E-commerce suppliers may face additional reporting requirements in other EU Member States, as the current distance selling thresholds won’t apply. In addition, the rules are set to change again on 1 July 202, when all but the smallest of supplies would mean VAT registration and, potentially, tax representation in each Member States;
- Businesses with call-off stock in other Member States will need to register for VAT where the stock is located, or repatriate the stock before 31 December 2020.
- The EC Sales List and Intrastats, in theory, will no longer be required from 1 January 2021;
- EU refunds for the 2020 calendar year will need to be completed before 5 pm on 31 March 2021;
- Claims for the 2021 calendar year will be subject to different rules and deadlines (usually 30 June of the following year) and involves forms being completed in the language of the Member State that the claim is being made to, and the provision of a Certificate of Status issued by HMRC;
- Overseas businesses claiming from the UK may be in luck, as HMRC is considering an electronic claim system!
As time progresses, more will come out of central Government and we will keep you updated as things develop.
If you have any questions about any of the issue listed above, please get in touch with Ruth Corkin on firstname.lastname@example.org.