Proposed changes to VAT ‘could create additional burdens’ for business
The British Retail Consortium (BRC) has warned the government that proposals to change the way in which VAT is charged post-Brexit could create ‘additional burdens’ for UK businesses.
In its Taxation (Cross-Border Trade) Bill 2017-19, the government has proposed to amend the way in which EU imports will be treated following the UK’s withdrawal from the EU in 2019.
A proposal to change the VAT rules is included in the Bill, which could see UK businesses being required to pay VAT upfront in cash to HMRC.
Currently, goods imported from the EU are treated as ‘acquisitions’ for tax purposes, meaning that VAT is not paid until the products have been sold to the end consumer.
However, if the UK exits the Customs Union, goods from the EU will be treated in a similar way to other imports.
Commenting on the Bill, the BRC stated: ‘If the Bill becomes law without any commitment to inclusion within the EU VAT area, UK businesses will become liable to pay upfront import VAT on goods being imported from the EU27 for the first time.
‘Liability for upfront import VAT will create additional cashflow burdens for companies, as well as additional processing time at ports and border entry points attached to the customs process.’
Meanwhile, the Chair of the Treasury Select Committee, Nicky Morgan, stated that she intends to contact HMRC to seek clarification on how the VAT proposals could affect UK firms. She will also propose that MPs investigate into the changes.
As your accountants, we can help you with your VAT obligations. Please contact us for advice and assistance.