VAT QUESTIONS TO ASK, POST-BREXIT

Thursday, September 8, 2016

Keeping up to date with the ever changing tax landscape is essential and we help CPAA members do so in a variety of ways with our CPD programme.

This includes seminars held across the UK, an online training portal, a web-based resource library, email content and a member’s magazine.

Our autumn seminar season started this week which covers topics from money laundering to auto enrollment. Seminars always cover a tax update, where the team at 2020 Innovation summarise notable tax developments. As the first series of seminars since Brexit, this is a topic still topping the agenda at most industry events as practitioners try to make sense o the implications.

As we have covered in our own post-Brexit analysis, VAT is the one tax that is likely to see the most significant changes as a result of leaving the EU. While speculation is rife that an independent UK could abolish VAT, it seems unlikely given the amount it pours into the government. In this year’s Budget, it was announced that VAT would raise £138bn revenue for the UK Treasury.

It’s a waiting game though; with two years to leave the EU once Article 50 is triggered, whenever that may be. Until this point, it is business as usual in the EU being largely VAT and duty free. The long lead-time at least means that any changes will come about gradually and implementation costs will, hopefully, be kept as low as possible. It gives businesses time to plan for the future.

Trade between EU member states currently sees B2B transactions are zero rated for VAT purposes. Clearly, once the UK isn’t a member state, the intra-EU rules no longer apply. Unless negotiations secure an alternative, sales into the EU will be subject to EU VAT. Local EU VAT registration may be required; additional costs may be incurred for arranging imports and exports; and recovering VAT on overseas expenses is a paper-based and lengthy procedure. These are factors to prepare for.

What to expect when it comes to Free Trade Agreements is anyone’s guess. Without such agreements, WTO tariffs will apply, which makes them vital for businesses with EU supply chains. Expect much lobbying of the government by big British businesses to help protect these valuable agreements.

The CPAA's autumn seminars will deliver the latest 2020 Innovation monthly tax update via webinar, which looks at what businesses should be doing now and recommends the following tips for practitioners and their business clients:

  • Review WTO tariff codes for intra-EU supply chains, to consider the worst case scenarios
  • Review customer contracts for delivery terms (i.e. would the client be responsible for any Duty chargeable rather than the customer?)
  • Consider if your customer will act as importer of record
  • Establish the VAT rate of the countries you trade in
  • Discuss the future structure of the business – could an EU subsidiary be established?

If you have not signed up to attend this round of seminars, visit the CPAA training portal to view webinars online. Between our web content and seminars, we provide access to over 30 hours of CPD material from market-leading training organisation 2020 Innovation, including monthly taxation updates, specialist accountancy topics and practice management and development webinars. This is all part of the Association’s continued commitment to professional development, which we hope you will take full advantage of.