While nobody knows what the final outcome will be, it would be prudent to understand how VAT could impact your 
business going forwards.
As part of the Brexit process, The Customs Bill has been drafted to formalise UK law on trading with the EU.
If the final Brexit deal involves the UK leaving the EU Customs Union, then we can expect the rules surrounding trade with the remaining EU member states to look very much like the current rules for trade with non-EU countries.
Businesses that currently trade with EU member states could see an increase in costs, administration and delays.
Goods purchased from other EU countries are treated as ‘acquisitions’. They are not subject to Customs duties; VAT is accounted for by the purchaser on their VAT return. There is no cash outlay and for businesses that do not make VAT exempt supplies there is no net effect on their VAT liability.
Goods purchased from outside of the EU are subject to different rules. ‘Imports’ may be liable to Customs duties and Import VAT. Import VAT is paid at the time of Import and (subject to the normal rules on input tax recovery) can be reclaimed when the business receives a C79 certificate from HMRC. In contrast to an ‘acquisition’ there is a physical payment followed by a VAT reclaim that can only be made when the necessary evidence of payment is received from HMRC.
A further cost to businesses in this scenario is that import VAT is calculated on the value of the goods plus any applicable Customs duties. Not just the value of the goods as would be the case for an EU acquisition.
If you have any questions regarding the VAT implications of international trade call one of our VAT experts on 0115 778 8533.
