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THE VAT BREXIT BIBLE

Sep 17, 2020 DAMIAN SHIRLEY

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It’s now business-critical to consider the impact of trading within the EU under what will be entirely new rules.

We’ve been cutting through all the messy stuff for our clients so they can focus on what they do best. But for those closer to the detail, we’ve identified a few lessons from our dealings at this stage. Good lessons.

We hope they’ll resonate and help you, and of course, if you’d like to chat, you can get in touch with Damian Shirley, our Indirect Tax Partner and lead on all things Brexit, at damians@cooperparry.com

Anyway, without further ado…

The Brexit Bible

1) Someone in the chain needs to pay import VAT when moving goods into the EU. If it’s not the customer, then most likely it’s you. You will need to register for VAT to recover the import VAT in the country concerned, so be prepared for that.

Our recommendation is to work out who the importer actually is. What do your trade terms say? Who holds risks where and who arranges transport? This can all impact our next point.

2) If you do need to VAT register in other EU member states, you may need to have a fiscal representative in the country concerned, or even an establishment in some cases, to administer the VAT. We can help to facilitate that and also think about any underlying PE issues for wider tax.

3) If you are trading B2C on a global platform, you will no longer enjoy EU simplification measures. You may need to register in all EU member states. There is no VAT threshold if you are not established in the EU. This could mean 27 new VAT registrations, but you can get in touch with us to streamline the process.

4) Customs Duty on imports into the UK will be subject to the new UK Global Tariff. What is your new classification and tariff rate? Who is responsible for paying that Duty under your terms of trade and how will it affect price negotiations?

5) If you enjoy preferential tariff rates on imports from particular countries, these won’t exist unless the UK agrees its own equivalent arrangement with the country concerned. Don’t be caught out by this.

6) You may get a double Customs Duty hit on moving goods into the UK and back out to the EU, and vice versa. Have you worked this through, and have you considered if simplification measures are available – such as Inward or Outward processing relief and Customs Duty warehouses?

If not, start thinking about it and let us know if you need help. The process to obtain approval is arduous and time-consuming at the best of times.

7) If you are importing goods on one shipment to both UK and EU markets, have you thought about the optimum interim location to hold and split the goods prior to being moved to their final destination? This could save a double Duty challenge in the worst case.

8) You need to ensure your EORI (Economic Operator Registration and Identification) status is valid for trading in the EU, and also your arrangements for goods clearance on entry into the EU are well set for seamless trade. You may well need two EORI numbers, one for UK imports/exports and one for EU imports. Don’t forget, lots of traders will be applying so don’t get caught out.

9) You are no longer ‘despatching’ goods to another EU member state – you are exporting them. The evidence requirements for moving goods VAT free from the UK are completely different under those scenarios. It’s an easy hunting ground for HMRC, so don’t get caught out and get your processes ready.

10) Some products traded B2c may require entirely different labelling and regulatory requirements when sold by non-EU established traders. Have you thought about that?

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