UK to leave EU VAT regime 31 Dec 2020
- Mar 21, 2018 | Richard Asquith
The UK’s date for leaving the EU VAT regime has been potentially set for 31 December 2020.
On 19 March 2018, the UK and EU negotiating teams confirmed that a new draft Withdrawal Agreement, to be released later this week, will include a 21-month transition period ending 31 December 2020. At present, by act of law, the UK will leave the EU VAT system on 29 March 2019.
The implications for UK businesses include:
- Importers will face a UK 20% import VAT bill and cash flow recovery admin on all their goods coming into the UK
- The imposition of a potential £720 million in VAT compliance costs on up to 27,000 small businesses to continue to sell online after the loss of the EU distance selling threshold relief.
- Irrecoverable customs tarriffs of 4% on average for importers of goods into the UK from the EU
- UK sellers of digital services (streaming media, apps and e-books) losing their right to the EU MOSS single VAT registration and filing facility
- UK exporters of goods to the EU having to appoint special tax representatives for tax reporting in 19 of the 27 EU states
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