What are the most relevant VAT consequences for businesses if there is no Brexit deal on 29 March 2019?
After 29 March 2019
The UK will continue to have a VAT system after it leaves the EU that will regulate imports, exports, cross border services and that may interact with EU IT systems.
In the UK the current regulations for imports from non-EU countries will apply. However, postponed accounting for import VAT for imports from the EU will be introduced for UK traders to mitigate the cash-flow impact.
The UK “Low Value Consignment Relief” will not be extended to goods coming from the EU.
The distance selling arrangement will not work between the UK and the EU, and vice versa. VAT and customs regulations will apply in both directions.
The UK “place of supply rules” will remain the same. However, UK VAT deduction rules may change for financial services. EU businesses doing business with UK customers can deduct input VAT related to that business.
UK VAT Mini One Stop Shop (MOSS)
The MOSS for non-EU businesses will be available for UK businesses selling digital services to EU consumers. Such businesses need to register for MOSS in an EU Member State.
At this point in time, there is no clarity on how import/export would work between the UK and Northern Ireland. UK government has expressed its concerns and will act in the best interests of the people of Northern Ireland.