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    • VAT & Brexit

    The UK effectively left the European Union with effect from 1 January 2021, after which the VAT and Duty rules that apply to trade between the UK and the EU were subject to significant changes.

    Although the UK government and the EU are still in the process of finalising the rules under which the UK will ultimately trade with the EU, some changes were deferred and there is still much to be agreed.

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    Cross Border Supply of Goods

    The most obvious change from 1 January 2021 is that there is no longer free movement of goods between the UK and EU countries. We have the expertise to advise any businesses buying or selling goods from or to EU countries, including advice on how to comply with new procedures and how to minimise the impact of the changes.

    Cross Border Supply of Services

    Significant changes will also apply to the supply of services, and some of these may result in UK businesses having to register for VAT in one or more EU countries, particularly those providing services to consumers. We can assist service providers to navigate their way through the new rules and manage their VAT position.

    Keeping Abreast of VAT Changes

    We expect that in addition to the changes to the VAT treatment of cross border supplies, leaving the EU will also give HMRC more freedom to change UK VAT rules. Although HMRC have not yet adopted any VAT changes that have been enabled by Brexit, we  will be in a position to provide clients with early notification of any proposed changes should they materialise.

    Brexit Tax and VAT

    The UK effectively left the European Union from 1 January 2021, after which there have been significant changes to the VAT and Duty rules that apply to trade between the UK and the EU.

    The full implementation of many changes were deferred for at least 12 months, and the UK government are still in the process of agreeing some of the rules under which the UK will ultimately trade with the EU..

    Although a number of reliefs and deferment processes were introduced, goods moved between the UK and the EU are now potentially subject to Customs Clearance procedures (both in the UK and in EU countries) and import duties and import VAT are potentially payable on many types of goods moved between the UK and the EU (and vice versa).

    Compliance burdens are also expected to increase significantly.

    There are also other significant changes to how VAT applies to cross border trading (both goods and services) as VAT simplifications that business have relied on over the years have disappeared.

    Sectors that are being significantly affected are:

    • Online retailers and other online suppliers
    • Online service providers (particularly providers of ‘electronic services’)
    • Travel and tourism
    • Transport

    This list is not exhaustive and Brexit is having an impact on most businesses.

    Changes to UK VAT rules

    Another area in which significant changes may arise as the UK severs its fiscal ties with the EU is the UK’s domestic VAT legislation.

    As a member of the EU, the UK’s VAT rules broadly reflected wider EU VAT legislation and the ability to change domestic VAT legislation was limited.

    However, these restrictions were removed as the UK completed its exit from the EU.

    The scope for changes to the UK VAT legislation is therefore significant.

    Although we do not expect wholesale changes to the VAT system, it is likely that VAT and other indirect taxes will become much more of a focus for the Treasury, particularly as a means of increasing tax revenues

    Some of our specialists who can help

    Keith Miller

    Associate VAT Director

    Keith primarily specialises in advising on all aspects of VAT, but can also advise on other indirect taxes. Keith works closely w...

    Related Services

  • VAT Advice
  • Mergers and Acquisitions VAT
  • VAT on Property
  • VAT & Financial Services
  • Retail and online goods and services

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    Please provide as much detail as possible in regards to the reason for your enquiry so our tax advisers can prepare and tailor their response to reflect your needs. We will endeavour to - respond / call you back - to discuss your enquiry and you will not be charged for this time.

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