Brexit and VAT

EORI numbers being issued

In anticipation of a no deal Brexit, Boris Johnson has issued all VAT registered businesses in the UK (that don’t have one) with an EORI number.

It is a European Union Registration and Identification number. It will be needed post brexit, if your business imports and exports goods into or out of the EU, in order to clear goods through UK Customs.

Some people will receive the letter and worry. They will wonder if they need to do anything with it because they have received a letter, especially if it doesn’t apply to them. Other businesses that are not VAT registered, but are involved in import or export, will still need to request a number if they haven’t already done so.

So just because you get a number, it doesn’t mean you need to do anything. Basically, the government is trying to ensure that people are ready, rather than people panicking later when they have no EORI number as they didn’t realise they needed one. This number will be needed to complete Customs Declarations post Brexit when trading with EU.

Postponement of Import VAT

To ease the burden on businesses, import VAT for goods brought into the UK from both EU and non EU can, after no deal brexit, be accounted for in VAT return, rather than paid at time of import. Businesses will be able to download a statement showing the import VAT postponed for the previous month and when to include it on the VAT return. Without this, businesses would have a cashflow disadvantage as they would have to pay the import VAT at Customs and not be able to recover it until their next VAT return. This doesn’t defer payment of the duty though.

Transitional Simplified Procedures

By registering to use transitional simplified procedures it can make things easier on importing goods into the UK as it allows you to delay submitting a full declaration and paying the duty. It allows you to reduce the information given in an import declaration when the goods pass the border. Not everyone can use it but you should consider whether it would be beneficial to you.

European Sales Lists

Businesses that have religiously submitted monthly or quarterly ESL forms to HMRC may or may not be aware that these will no longer be required post brexit. There will be a final one to complete upto the Brexit on 31 December 2019. HMRC has already put information about this on the Business Tax Account VAT section so most people who complete ESLs will already be aware of this.

EU Schemes

With no deal Brexit we are also likely to come out of EU schemes such as Tour Operator Margin Scheme for travel operators and the MOSS for digital services. Businesses using these will need to keep upto date with changes to know what they need to do. Also businesses making use of distance selling rules may find that they need to register in an EU country.

Two months to go

So although the issuing of EORI numbers is definitely helpful, there is still a lot for businesses operating overseas to be aware of. Businessess that have only ever operated in Europe will probably have more to become familiar with compared to businesses that are operating worldwide.

With two months to go however who knows what sort of deals will be made and what exactly will need to be done. Businesses need to be aware of how the changes could impact them and consider whether they need to do anything now to be prepared. If you may be affected, do seek advice from your accountant. The above is a very simplified overview of a rather complex area.