Please note, the points below will only come into effect if there is a ‘no deal’ Brexit. If there is a deal with the EU then there should be a transitional period where most items will remain as they are currently for a period (maybe 12-18 months) to allow for agreement on the issues post Brexit. Finally, if another extension to Brexit is agreed then all rules will remain as they are currently during the extension.
Businesses Trading with the UK
The UK Government website provides advice for EU businesses trading with the UK covering VAT, imports & exports, personal data and employment issues.
There are some specific VAT related points:
How to pay VAT on sales of digital services to UK consumers
You will not be able to use the VAT Mini One Stop Shop (MOSS) to report and pay VAT on sales of digital services to consumers in the UK.
You must register and pay VAT in the UK as soon as you supply any digital services to a UK consumer.
The current €10,000 threshold for cross-border sales of digital services inside the EU will no longer apply.
Checking UK VAT numbers
After Brexit, you will be able to check if a UK VAT number is valid by using the UK’s VAT checking service (this service is not available yet but is expected for 1 November).
You’ll no longer be able to use the EU’s VAT number validation service, to check the validity of a UK VAT number.
How to claim UK VAT refunds
Claims for VAT on business expenses before Brexit
Claims can be made using the EU VAT refund electronic system, but you should allow enough time for your member state to send the claim to the UK. If a claim is sent through the online system after Brexit, it will not reach the UK.
The deadline to submit a VAT refund claim will stay the same:
- 30 September 2019 for claims for VAT incurred on expenses in 2018
- 30 September 2020 for claims for VAT incurred on expenses in 2019 up to the date of Brexit
Claims for VAT on business expenses after Brexit
You’ll no longer be able to use the EU VAT refund electronic system to claim refunds of VAT incurred in the UK.
You must follow the manual processes for businesses outside the UK.
The main differences are:
- the repayment period runs from 1 July to 30 June instead of 1 January to 31 December
- the deadline for submitting a claim is the following 31 December (6 months from the end of the claim period)
You’ll also need to provide:
- a certificate confirming your taxable status
- all original invoices and receipts to support your claim
Opportunities to provide services to UK clients who will need to register for VAT in an EU Member State where they are trading with consumers in the EU
HMRC have published guidance to UK businesses in the form of a Guide to dealing with VAT if there is no brexit deal
If you have a UK business that wants to continue to use MOSS to account for VAT on sales of digital products to consumers in the EU after Brexit they will need to register for MOSS in an EU member state. To allow for this, the UK business will be automatically deregistered from the UK MOSS system. Then the business must register for the scheme by the 10th day of the month following its first sale after Brexit.
However, the latest information is that a business will only be able to register for MOSS in an EU member state after Brexit, not in the remaining weeks before Brexit. In terms of selling goods to EU consumers from the UK the distance selling arrangements will no longer apply to UK businesses but they will be able to zero rate sales of goods to EU consumers. Current EU rules would mean that EU member states will treat goods entering the EU from the UK in the same way as goods entering from other non-EU countries, with associated import VAT and customs duties due when the goods arrive into the EU.
Where UK businesses have a stock of goods in an EU Member State they will be able to continue to sell goods to customers in the EU in line with current Rest of World rules. Current EU rules would mean that UK businesses will continue to be required to register for VAT in the EU member states where sales are made in order to account for the VAT due in those countries
We can offer specialist guidance
This is obviously a complex area, however our tax and VAT experts will be happy to discuss any specific questions you have and assist in helping you to prepare.
Please contact your local partner, or enquire with us today