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UK Brexit customs & VAT white paper

  • Oct 8, 2017 | Richard Asquith

UK Brexit customs & VAT white paper

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

Dispute resolution

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.


Explore more content like this in our Brexit hub

Need help with your UK VAT compliance?

Researching UK VAT legislation is the first step to understanding your VAT compliance needs. Avalara has a range of solutions that can help your business depending on where and how you trade. 

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VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.