Taxation

London

No Deal Brexit: Single Market vs Exports of Goods

By Dean Jefferies, Haines Watts

The draft legislation recently issued by HMRC, in anticipation of a nodeal Brexit, focuses on measures to reduce friction when clearing goods that enter the UK (or enter another EU member state from the UK).

However, it is also important to understand and plan for the change to the UK VATcompliance requirements.

If the UK adopts a model based on the current requirements for exporting goods outside of the EU, it will mean fundamental changes in how a business accounts for VAT when moving goods out of the UK into the EU. For example:

There will be no requirement to obtain and validate a customer VAT number in order to not charge VAT – the main requirement will be the retention of “offcial or commercial evidence” that the goods have left the UK;

EC Sales List and Intrastat forms will no longer need to be submitted;

There will be no need to monitor distance-selling thresholds for B2C transactions, which will no longer be subject to UK VAT, provided the rules are met for exporting goods, although there may be an obligation to register for VAT in the EU member state of destination.

The main difference between an export and an EU supply is the requirement to retain “offcial or commercial” evidence that the goods have left the EU within a specified time limit. With regard to exports, this is a condition that HMRC normally approach more stringently during a VAT inspection.

What to do?

In this age of online digital sales and complex supply chains it is not always easy to access the “offcial or commercial evidence” that show that goods have been transported to a destination outside of the UK, much less be able to link the evidence provided by a carrier (or agent) to an actual transaction.

In order to avoid EU exports being subject to UK VAT post-Brexit, it is vitally important that businesses review VAT accounting procedures to ensure that the appropriate evidence is collated to justify zero rating the movement of goods post-Brexit and understand what constitutes “evidence” in the UK.


Dean Jefferies

Dean Jefferies

Haines Watts, More than 60 offices throughout the UK
T: +44 207 025 4656
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With over 60 offices around the UK, Haines Watts is a UK Top 15 firm of Chartered Accountants specialising in the owner-managed business sector. Assisting over 35,000 business owners around the UK, Haines Watts supports business owners’ aspirations and help them to achieve their goals.

Dean Jefferies is a VAT Senior Manager at Haines Watts, a leading provider of business advice and accounting services to owner managers operating in the UK and abroad.


Published: Indirect Taxes, No. 08 Spring 2019 l Photo: jotily - stock.adobe.com

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