Bishop Fleming’s VAT Director, Wendy Andrews, highlights the potential issues for businesses and consumers of Brexit following the government’s triggering of Article 50 to leave the EU.
The phoney war has ended and the UK begins the process of negotiating its exit from the EU. This process will be long and complex, but once it is concluded and the UK leaves the EU it is likely that the first practical impact will be felt on sales to, and purchases from, the remaining EU.
The fact that the government have been clear that they do not expect the UK to remain within either the single market or the customs union means that some of the implications can be set out with some certainty.
key practical implications for business of all sizes and for consumers:
With the UK outside the single market and the customs union, goods which are dispatched to customers in the remaining EU will need to cross a customs barrier of some kind. This may result in delays at the border, which may impact businesses selling perishable products and other time-critical supplies.
Although it is possible that the UK will negotiate a free trade agreement with the remaining EU, without such an agreement there may be customs duties on goods imported into the EU which will affect the competitiveness of UK goods against similar EU produced goods.
For businesses which sell to private consumers in the EU, the creation of a customs barrier could have significant practical implications, unless special arrangements are put into place. Without such arrangements, consumer customers may have to pay import VAT and customs duties before they can take delivery of goods they have ordered from a UK-based website.
Purchases by a UK business from an EU supplier may also need to cross a customs barrier, leading to potential delays and the need to pay import duty and VAT. VAT is likely to be reclaimable but could lead to a cashflow cost if it has to be paid at or soon after importation, and reclaimed on the next VAT return.
The level of any customs duty imposed on goods arriving from the EU will depend on the eventual agreement, but if there is duty on imported goods it will make them more expensive than locally produced goods.
Goods which have been purchased from an EU website may need to have import VAT and duty paid before they can be delivered – this will increase the cost and make the process more difficult.
Bishop Fleming will be commenting as the process goes on and we are always ready to discuss clients’ concerns.
If you would like to discuss the implications of Brexit for your business, please contact your usual Bishop Fleming adviser or a member of our VAT team.
Posted by Gary Mackley-Smith on June 21, 2017
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