With a no-deal Brexit remaining a possibility and with under a month to go, time is running out to prepare for the VAT, Duty and Customs clearance issues businesses may face, in particular those that trade in goods with the EU. Here is a reminder of what you should be planning for now…
HMRC have issued a business brief announcing a postponement to the implementation of the new domestic reverse charge which was due to take effect from 1 October. It has been delayed by a year and will now start 1 October 2020.
This article has been updated to reflect HMRC's postponement of the new domestic reverse charge to 1 October 2020.
A change to the way contractors in the supply chain will account for VAT comes into effect on 1 October 2020. These new rules represent a significant change as they will remove the current requirement for VAT to be charged on sales invoices from one contractor to another.
If the UK leaves the EU without a deal, UK businesses that import or export goods will need to apply the same procedures to EU trade that apply when trading with the rest of the world.
Under the current system, goods imported into the EU are only released from Customs if a full import declaration is made and any duty paid in full at the time of import.
There is a risk that, if you do not have the appropriate systems set up, there will be delays in delivery times and possible additional cost. You may therefore be behind the competition. If we leave without a deal these changes take effect from when we leave. If this is 31 October, as widely predicted, there is not much time left to make sure that you are prepared.
It’s a fairly common misconception that charities do not pay tax; this may be true in general for corporation tax but from a VAT perspective charities pay VAT on the majority of their costs and generally are unable to recover that VAT from HMRC. There are some reliefs available though, perhaps the most beneficial being the ability to zero rate the construction or purchase of buildings that are used for a relevant charitable purpose (RCP buildings). Given that buildings can cost a lot of money and any VAT charged is generally not reclaimable, this represents a significant saving where the building qualifies.
The deadline for the UK’s ‘Brexit’ from the European Union is drawing closer. Though consensus has still not been reached, it is clear that whatever decisions are agreed, Brexit will bring challenges and be one of the top tax considerations in the coming year if you are doing business across Europe. Aside from Brexit, there are many other potential tax pitfalls that need to be considered and circumnavigated now. If you are trading with the UK, VAT and Customs Duty rules need to be given a high priority.