UK Brexit customs & VAT white paper
- EU VAT
- 09 October 2017 | Richard Asquith
The UK government has published a White Paper detailing its legislative approach for a post-Brexit Customs, Excise and VAT regimes. This is the forerunner to a Customs Bill, which will be produced later in the Autumn.
The Paper envisages the implementation of a negotiated settlement with the EU, including a time-fixed transition period. However, it also considers how the government would manage in the event of no deal being reached – a ‘hard Brexit’. It is built many hundreds of consultations with businesses, ports, airports and related stakeholders by HM Treasury and HMRC.
Post Brexit VAT
The paper anticipates the UK being outside of the EU VAT regime and being regarded as a 3rd country. This means the imposition of import VAT on goods movements between the UK and the EU. This will impose new reporting and potential funding of import VAT by traders.
Details of how any VAT regulations would be applied would be left to secondary legislation, outside of the scope of the Bill.
Northern Ireland no-border option
The paper looks to avoid a new customs border between Ireland and Northern Ireland, and adds to the Northern Ireland and Ireland Position Paper. This includes:
- The creation of a ‘cross-border trade exemption’ for smaller, local trade which account for around 80% movements.
- Special ‘trusted trader’ status for regular cross-border traders with simplified customs procedures – including reduced declarations and periodic payment of duty
Hard Brexit contingency
The Autumn Customs Bill will provide for the circumstance of no negotiated settlement, and legislating for a new customs regime. This will include
- The right of the UK to create a stand-alone customs regime immediately
- Tariffs and quotas under WTO rules. This would mean limited change for non-EU goods
- Customs declarations and checks would come into place immediately on EU trade for the first time, and goods would be subject to import VAT and customs duty
- The government will look to develop new, seamless processes for EU ports and the Northern Ireland border where large volumes of EU imports or exports are processed in a short period - 'Roll-on roll-off ports'. In particular, the requirement for space-limited ports to continue to be able to rapidly process arrivals and departures of goods
- The low-value consignment stock relief, exempting small parcels from the EU below the value of £15, from customs or import VAT would be withdrawn
- The Paper does not address contingency plans for the Northern Ireland border in the case of a Hard Brexit
On the UK leaving the European Union, the European Court of Justice will cease to hold direct jurisdiction over the UK's Customs, VAT and Excise affairs.
HMRC announced today that it is opening the test pilot for its Making Tax Digital for VAT programme to the public. However, HMRC also announced...
From 1 April 2019, more than 2 million VAT-registered businesses will be required to digitize their accounting and VAT filing for the new HMRC Making...
The UK’s HRMC has confirmed the next-stage plans for its Making Tax Digital (MTD) for VAT pilot. The pilot is aimed at helping develop filing...