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The Brexit bill: 2020 predictions for VAT and duty rules

As the move to pass the Brexit Bill is heard in Parliament and the final amendments and decision set for January 9 we are sharing our predictions for VAT and duty rules for 2020.

  • With the expectation that the Brexit bill will be passed, the UK will enter a transitional period which ends on Dec. 31, 2020.
  • Existing intra-EU VAT and duty rules will apply throughout the transitional period—so it is business as usual for now.
  • We expect that businesses will continue to complete EC Sales Lists (ESLs) and Intrastat to report their EU transactions.
  • Simplifications and special procedures such as triangulation, margin schemes, mini one stop shop (MOSS) and intra-EU VAT recovery via the portal will remain.
  • The no-deal emergency measures will be mothballed for now. However, this is reliant on the EU accepting the amendments to the Brexit bill.
  • The amendment to the Brexit bill to prohibit the extension of the transitional period raises the potential risk of a no-deal at the end of 2020.
  • Most observers agree that 11 months to negotiate and finalize a free trade agreement is optimistic and without the ability to extend, no-deal does not disappear.
  • In the meantime, those signed up to the transitional simplified procedures (TSP) measures implemented by HM Revenue and Customs (HMRC) to make imports into the U.K. easier for the first year, should keep these on file in case no-deal raises its head again.
  • In our view, businesses in transitional simplified procedures (TSP), do not need to set up a duty deferment account, it is not a requirement for now.
  • We remain within the Customs Union during the period. We recommend that businesses in manufacturing, food, automotive and those with EU parent companies start planning in the New Year. Warehousing, inward processing relief/outward processing relief (IPR/OPR) and authorized economic operator (AEO) are complex applications with a long lead in time. These regimes will be all important once the U.K. leave the EU.
  • Customs warehousing will become essential for those businesses who trade with Southern Ireland, using Northern Ireland as a logistics route.  

There are major VAT changes being introduced in the EU on Jan. 1, 2020. For those who are registered for VAT in the EU, learn more about these changes and how to start being compliant. For more information on this topic, or to learn how Baker Tilly international tax specialists can help, contact our team.

The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.