Hopefully that got your attention……..exciting may be stretching it but please read on. It’s that dreaded word again, Brexit, which fundamentally changes how we trade with the EU and this clearly has VAT impacts. So if you have any suppliers or customers in the EU there are things you need to consider and actions you need to take…..NOW.
Here are some, but not all, of the key points:-
- If you sell goods to customers in the EU this will be treated as Export under VAT rules. The HMRC has published an Export Checklist, please read.
- If you buy goods from an EU supplier this will be treated as Import under VAT, again there is an HMRC Import Checklist.
- Distance Selling, or more accurately, ‘sales to non-taxable persons’ will be significantly affected. This is further complicated by the fact that the EU rules on distance selling will change in July 2021. The rules are complicated, so beyond the scope of this post but if you sell product to consumers or businesses that are not required to be VAT registered such as a significant proportion of medical and dental practitioners, you will need consider what actions to take. The changes mean that goods could be held at the border until your customer pays local tax on the goods, in addition to what they have paid you, meaning very unhappy customers!!!! As I mention you may need to implement interim changes and then more permanent ones after July 2021.
- As with much of the Brexit preparations there are special considerations if you are buying and selling into Northern Ireland so please aware.
Finally, a lot of the chat about VAT includes the word “smuggling”!!!! The various agencies are concerned that the major changes that are likely in January will result in a significant increase in such activity, whether that is on purpose or because traders have not taken appropriate actions. Remember ignorance is no defence in law.