Brexit and VAT
The result of the 23 June Referendum was a majority in favour of leaving the European Union. There will be no immediate changes to the legal and regulatory environment, however the impact on VAT could perhaps be the most significant. In particular, the way that we trade in both transactions in both goods and services between the UK and the other 27 EU countries are likely to be the most affected.
The following changes could be expected when the UK leaves the EU:
• Abolition of Intrastat for movement of goods to and from the UK;
• Abolition of EC Sales Lists for sales from the UK to the remaining EU countries;
• Introduction of import and export rules for supplies between the UK and the remaining EU countries;
• Increase in duty deferment facility to cover import VAT and possibly customs and excise duties relating to imports from EU countries;
• The distance selling thresholds will no longer apply for small value of exports to remaining EU countries ;
• Changes to the Mini One Stop Shop – VAT will still need to be charged and accounted for in relation to affected supplies to customers in the remaining EU countries. This may mean registering for the non-Union Mini One Stop Shop scheme in a remaining EU country if HMRC is unable to continue operating a UK scheme;
• Refunds of VAT incurred elsewhere within the EU may become more difficult, having to rely upon the 13th Directive refund scheme;
• EU VAT law and rulings of the CJEU will cease to have direct effect, with the UK law and Courts becoming the ultimate arbiter;
• In theory, VAT rates could change up or down, including items currently subject to VAT at 5% becoming zero-rated, although such changes are not currently permitted under the UK VAT Lock legislation;
• The Tour Operators’ Margin Scheme could be changed or abolished.
It is perhaps just worth noting at this stage, that if Scotland were to become an independent country within the EU, the effects are likely to be considerably more significant.Talk to Barnes Roffe today