Most of us wish Brexit and the political football being played over what was a non-legally binding decision to leave would end.

Many businesses breathed a sigh of relief when the date to leave the EU in October was put off for the second time in six months, even as others were irate at the process being dragged out yet further. 

The extension prevented potential disruption of a no-deal, but did add to more than three years of uncertainty.

A lot can change between now and the next divorce date, just an hour before the midnight deadline for tax returns on 31 January 2020.

Not least because the electorate goes to the polls for the third time in four years on 12 December 2019 and Brexit still dominates the debate.

The Conservatives pledge to deliver Brexit, Labour promises a second referendum – its own deal or remain, and the Liberal Democrats want to revoke Article 50 outright.

That means that unless the Lib Dems win an outright majority, the UK will probably leave the EU in the near future, one way or another.

Businesses, therefore, should continue to focus on the practical side of things and consider the implications for VAT rules on goods and services traded between the UK and the EU.

VAT rules before Brexit

VAT is currently charged on most goods and services sold in the UK and the EU, and is payable by importers.

One set of rules applies when importing goods or services from within the EU. Another set of rules kick in when importing from a non-EU country.

Businesses that export goods to non-EU nations or EU businesses are zero-rated, while UK VAT does not apply at the point of sale.

Domestic goods that go to EU customers are liable to pay either UK or EU VAT, subject to distance selling thresholds.

For services exports, place of supply rules apply to determine the country you need to charge and account for VAT.

UK and EU EORI numbers

If your VAT-registered business imports or exports goods (not services), it will need a UK EORI number to trade after Brexit.

EORI numbers previously applied to non-EU shipments but that looks certain to change should the UK leave the EU.

The UK EORI number will be needed to get goods in and out of the UK.

Your business will need a separate EU EORI number if it has a VAT-registered branch in an EU country and it imports goods into that country.

If your business has a domestic base and one in the EU, it can have a UK and an EU EORI number depending on its circumstances.

Postponed accounting

Most of the guidance from HMRC was issued under the Conservative government and focused on businesses preparing for a no-deal Brexit.

And, according to the pre-election manifestos, no deal has been taken off the table and with that goes most of the Revenue’s advice. 

Despite that, your business could experience cashflow implications if postponed accounting for VAT kicks in.

That’s because VAT would no longer be paid when your imported goods arrive in the UK. Instead, the VAT would be declared and claimed on your next VAT return.

EU VAT refund electronic system

If your business uses the EU VAT refund electronic system to claim refunds, claims for either 2018 or 2019 need to be submitted before 5pm on Brexit Day.

Miss that deadline and your business will have to use the process for the EU nation you’re exporting to. These processes differ between EU countries.

Ensure the claim deadline, the need for a certificate of taxable status, and any tax representative is included on your refund claim.

Feel overwhelmed? Of course, that’s not our goal and our VAT service can take care of this complex task.

Get in touch with us by emailing info@stapletonsaccountants.co.uk or calling 01363 773191 for more information on our VAT service.

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