CUSTOMS AND TARIFFS
VAT rules have changed after Brexit, and companies need to change their current systems in order to continue importing/ exporting to the EU27.
HMRC has provided a range of guidance on VAT issues since September 2020.
- The Border with the EU – Importing and Exporting Goods (a 159 page guide, published at the end of December 2020)
- How online marketplaces will deal with VAT for goods from overseas that are sold to customers in Great Britain from 1 January 2021.
- How sellers will deal with VAT for goods from overseas that they sell direct to customers in Great Britain from 1 January 2021.
- This collection brings together Customs, VAT and Excise EU Exit legislation and Customs notices that have the force of law applicable to UK transition.
- From 1 January 2021, if you’re an EU business not registered for VAT in the UK, check how to claim VAT refunds on goods and services you buy in the UK.
- How to claim VAT refunds from EU member states from 1 January 2021.
- HMRC provided this detailed update (August 2019) on the required VAT IT system rules and processes if the UK leaves the EU without a deal.
Under the previous rules, goods from the EU were referred to as ‘acquisitions’ for tax purposes. No VAT was paid until the products have been sold to the final customer and paid for.
From 1 January 2021, goods from the EU have to be treated like all other imports, with VAT will be payable on a postponed basis – except for goods entering the UK as parcels sent by overseas businesses. The rules for car imports have also changed.
UK-based companies exporting to the EU27 are now treated in the same way as goods entering from other non-EU countries, with associated import VAT and customs duties due when the goods arrive into the EU. The rules for companies supplying services in the EU have also changed.
Accounting for import VAT on goods imported into the UK:
The government has introduced postponed accounting for import VAT on goods brought into the UK. UK VAT registered businesses importing goods to the UK are able to account for import VAT on their VAT return, rather than paying import VAT on or soon after the time that the goods arrive at the UK border. This will apply both to imports from the EU and non-EU countries.
VAT on goods entering the UK as parcels sent by overseas businesses:
VAT is payable on goods worth more than £135 sent as parcels, VAT will be collected from UK recipients, in line with current procedures for parcels from non-EU countries.
UK businesses exporting goods to EU consumers:
Distance selling arrangements will no longer apply to UK businesses and UK businesses will be able to zero-rate sales of goods to EU consumers.
EU-wide VAT IT systems:
The UK will stop being part of EU-wide VAT IT systems such as the VAT Mini One Stop Shop.
EU VAT refund system:
UK businesses will continue to be able to claim refunds of VAT from EU member states but they will need to use the existing processes for non-EU businesses.
Northern Ireland businesses trading with Ireland:
N Ireland businesses trading with Ireland are recognised by HMG as facing “very significant challenges”, because of the “unique and highly sensitive context”. HMG recommends that “if you trade across the land border, you should consider whether you need advice from the Irish government about preparations you need to make”. Read more on our Northern Ireland Brexit Customs and Tariffs page.
Businesses trading with EU countries:
Businesses trading with EU countries may also wish to consult technical notices covering customs, excise and import processes at the border, which can be found here.