With little time left until Brexit occurs, HMRC has written to all VAT registered businesses to give guidance about how VAT on imports would function in the event of a no-deal.
If the UK leaves the EU without a deal, customs controls will apply for importing and exporting between the UK and the EU.
You need to be prepared for making customs declarations for goods imported or exported by your business, and you will need an Economic Operator Registration Identification (EORI) number.
The guidance states that businesses registered in the UK will be able to account for import VAT on their VAT return rather than immediately at the border. This practice called “VAT postponed accounting” is a move designed to ease the impact of Brexit. Businesses and individuals not VAT registered will have no choice but to pay the import VAT at the border.
We recognise the challenges that you face in getting to grips with new and unfamiliar requirements by 29 March 2019. We are committed to supporting you and your business through this period of change, helping you to comply and making importing and exporting with the EU in a no deal scenario as easy as possible.Jim Harra, Deputy Chief Executive HMRC
Action to Take
The letter recommends you talk to your tax agent about how a no deal Brexit would affect your business. You must authorise your accountant to use postponed accounting for import VAT.
Included in the letter are a further number of steps and options for you to consider including:
- Make sure you register for an Economic Operator Registration Identification (EORI) number.
- Avoid customs declarations by signing up to their Transitional Simplified Procedures (TSP).
- Only have to pay duty when your exported goods reach their final destination with the Common Transit Convention (CTC).
- How to check for VAT registration and applying for VAT refunds from EU countries.
HMRC Guidance Accounting for import VAT issued 6 March 2019