Impact on UK VAT in no deal Brexit scenario

March 5, 2019

If you carry out the trade with the UK and import goods from EU or outside EU, your business will need to comply with new processes and controls in case of No-Deal Brexit scenario.

In the event of the UK leaving EU without a deal, the EU Common Custom Tariff (CTT) will be replaced with a new UK Trade Tariff according to which you will need to pay any customs duties and make import declaration in the same way which is currently valid for goods entering the UK from countries outside the EU.

In order to ensure flowing trade HMRC is introducing new Transitional Simplified Procedures (TSP). If you are UK VAT-registered business importing goods to the UK, you will not have to pay import VAT at the UK border for the moment goods arrive to the UK, but will be able to declare and recover import VAT on the same VAT return as subject to normal tax rules. For this purpose, your VAT registration number will need to be provided on your customs declaration.

However, this simplification will not be applied for the low-value items of less than £135. This means that parcels valued up to and including £135, sent to the UK by overseas businesses, will be liable for VAT. This rule valid for parcel consignments which do not contain excise goods, are customs-declared to release to free circulation and aren’t already relieved from VAT under domestic rules (zero-rated supplies).

Overseas businesses importing low-value goods to the UK will be expected to register with HMRC in order to be provided with Unique Identifier which will have to be shown on all documents related to parcel consignment entering the UK. This procedure is introduced to ensure that non-UK VAT registered businesses accounts for the UK VAT and Customs Duty on goods imported to into the UK. The UK VAT and will have to be charged at the point of purchase by the seller and accounted with an HMRC digital service.

HMRC assures this online VAT registration, accounting and payment service will be available for overseas businesses prior to 29 March. There are penalties for the late or non-registration.

If you doubt whether your business activity is subject to the UK VAT or not, and if you need assistance with UK VAT registration and reporting procedure, our dedicated VAT experts are here to help you with any of your International VAT query.