UK Brexit Postponed Import VAT proposal
- EU VAT
- 02 May 2018 | Richard Asquith
As the UK plans to leave the EU VAT regime as part of Brexit, it is likely that a Postponed Import VAT scheme for EU imports may be reintroduced. This would protect importers – resident and foreign - from some of the negative VAT impacts of Brexit. HMRC estimates there are 132,000 UK businesses that trade with the rest of the EU.
Once the UK leaves the EU VAT regime, imports from the rest of the EU will become liable for 20% UK import VAT. Whilst this can then be recovered through taxpayers’ next quarterly VAT return, it does have a negative cash flow impact. To alleviate this, many other EU countries already offer a mechanism to defer the import VAT payment until the next return. This input VAT due would be offset against any output VAT due, and so no cash payment would be required.
Presently 21 EU countries offer such a scheme. The UK operated such as mechanism until 1984.
The date of the UK leaving the EU VAT regime is still to be fixed. Whilst the UK is leaving the EU on 29 March 2019, a 21-month transition to 31 December 2020 has been politically agreed.
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...