HMRC have now published further guidance on the process that businesses need to follow to account for import VAT on goods brought into the UK after 29 March 2019 in the event of a “No Deal” Brexit.
Currently import VAT on imports from outside the EU is accounted for at the border at the point of importing. On the other hand, the import of goods to the UK from the EU does not attract import VAT due to the principle of free circulation that applies to the movement of goods within the EU.
In the event of a no deal Brexit the UK leaves the UK without any beneficial arrangements for dealing with VAT on EU trade. As a result, goods imported to the UK after 29 March are treated in the same way as goods imported from outside the EU. This means that there will be a requirement to account for import VAT on goods imported from outside the UK, regardless of origin.
As a result UK businesses will potentially have to pay import VAT for the first time on goods imported from the EU and will only recover that cost upon submission of the relevant VAT return up to four months after the date of paying the import VAT. In an attempt to address the obvious cash flow impact that this will have on many businesses HMRC have prepared a temporary relaxation to the time at which import VAT has to be paid. The effect of this relaxation is that businesses can elect to pay the VAT at the end of the relevant VAT quarter as part of the VAT return submission. For some businesses this relaxation will be crucial in preserving cash flow and will be very welcome given the widespread uncertainty surrounding Brexit as a whole.
Further information regarding these provisions is available on the gov.uk at the following location: