VAT and Brexit

As a result of the lack of clarity concerning whether the UK is going to be able to secure a deal with the EU regarding Brexit, it is advisable for businesses to consider the potential impact of a ‘no deal’, which at the time of writing is likely to be effective from 31 October 2019.

With VAT in particular, the nature of what you are supplying drives the VAT liability, and in turn the impact of Brexit will depend upon what you supply, to whom, and where.

Goods

Businesses moving goods to the EU from the UK, and purchasing goods from the EU, to be brought to the UK, currently do not have to pay customs duty or make declarations, as a result of the free movement of goods within the EU. 

We have set out some quick tips that businesses should start to consider when buying and selling goods across, what will be the new UK/EU border. Take a look at what we have put together below:

VAT and Brexit quick tips

Services

The cross-border treatment of services differs to the VAT treatment of goods, set out above. Generally, business to business supplies of services from the UK will be outside the scope of UK VAT, when supplied to EU and non-EU customers, as the place of supply for VAT is where the customer belongs.

If you an international supplier of services, businesses should be considering the following:

  • Supply chain mapping, looking at what you provide and to whom. Consider current rules and how a no deal Brexit will impact your business and VAT accounting.
  • Does it makes sense to alter your supply chains in any way?
  • Will you need a VAT registration in an EU country?
  • Are you a partly exempt financial services provider, do you need to reconsider your partial exemption method calculation.
  • Do you provide services to other EU countries and the customer applies the reverse charge, for example land related services and/or other services where the place of supply is where performed, will this still apply in your situation, or do you need an overseas VAT registration?

Other considerations

EU resident businesses are entitled to make claims for VAT incurred in other member states, using the EU wide electronic cross border refund system. A UK taxpayer can currently use the government gateway to make these claims.  This will however no longer be available to UK businesses and they will need to start making claims directly from the EU Member State, where the VAT was incurred, using the non–EU entity paper based system.

How we can help

At Lubbock Fine we are here to assist and support you with all of the above and assess the impact on your business. What’s more, as members of the Russell Bedford International network we regularly work with partners in the EU so we can look at your transactions from all sides. If you would like to discuss any of these matters further please contact our VAT specialist, Jas Dhillon, jaspaldhillon@lubbbockfine.co.uk

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